Cerulli and Morningstar find just over 10% of advisors' wealth clients come from DC plans

New research from Cerulli Associates and Morningstar finds just over 10% of advisors' wealth clients, on average, come through what the two firms call the Bridge to Wealth—the systematic conversion of defined contribution plan participants into wealth management clients. Wealth managers hunting organic growth have warmed to the idea, but adoption still lags on scalability and efficiency.

Chris Bailey, a director at Cerulli, made the case in the release accompanying the research: "Growing a wealth management practice organically can be very challenging, so advisors may be missing out on warmer leads that exist within DC plans whom they already have relationships with." The warmth, as he explains it, comes from an existing relationship rather than a cold introduction.

The obstacles the two firms describe are operational: capacity constraints and high-touch engagement models, asset minimums, fragmented technology and limited access to participant data. Nearly 40% of advisors say they are not starting or growing a wealth management practice because they don't have time to prospect for wealth clients inside their DC plans—they recognize the opportunity and cannot scale it, since relationship-based prospecting is time-intensive and difficult to replicate.

Buy-in is its own hurdle: advisors have been hesitant to work with DC plans, viewing them as lower-margin, operationally complex and difficult to source, and without plan relationships in place there is no bridge to cross. Where advisors do lean in, the help they most want sits at the far end of the funnel—client conversion (53.4%) and prospect identification (43.7%) are the most valuable forms of firm support. The research names five pillars, detailing advisor buy-in, a scalable process and a comprehensive support system.

A second survey frames the same question differently: Advisor Insight, FUSE Research Network's benchmarking service, found earlier this year that 62% of advisors said they have converted at least 6% of DC plan participants into wealth management clients. That measures advisors clearing a threshold, while the Cerulli-Morningstar figure measures the average share of a book traceable to plans; the distance between the two suggests the industry has no common denominator for a channel firms increasingly treat as a growth source.

Cerulli's own forecast gives the debate a clock: roughly 35% of advisers are expected to retire inside a decade, thinning the capacity the research identifies as the binding constraint, while 63% of surveyed advisers call leveraging DC plans for wealth prospecting at least a moderate priority.

The five-pillar framing points the fix at firm-level infrastructure—a repeatable process and the participant data to feed it. The 10% share is the number that will show whether that changes anything.