According to a new study, nearly half (47%) of all advisors selling 401(k) plans now recommend an external manager for target date funds rather than the proprietary target date funds offered by the plan record-keeper.
The study suggests that the target fund market is more competitive; I think it’s an issue of advisors trying to minimize liability. The rampant litigation concerning revenue sharing paying and proprietary funds are making advisors gun shy in just recommending the proprietary funds offered by record-keepers. The days where advisors would just make deals to select proprietary funds of the bundled provider are long over because of concerns that selecting mostly proprietary funds is a recipe for potential liability either through litigation or more eyeballs from the Department of Labor.
Just my two cents.