The US defined contribution (DC) retirement industry, once buoyed by steady asset growth and strong equity markets, now faces a profitability squeeze due to fee compression, demographic shifts, and intensifying competition. As baby boomers retire and withdrawals surpass new contributions, the system is experiencing net outflows, pushing providers to rethink their business models. 

Recordkeepers are seeing administrative fees decline significantly and are increasingly relying on ancillary revenue streams—like brokerage accounts and financial advice—to offset shrinking margins. 

While total DC system revenues rose modestly between 2013 and 2023, the real surge came from retail wealth management, which generated $45 billion in new revenues, reflecting a shift toward participant-centric strategies. Providers are also contending with rising technology and support costs, prompting restructuring, digitization, and outsourcing, even as consolidation gives larger firms scale advantages. 

Finsum: Retirement solutions providers are being forced to adapt quickly, with success increasingly tied to their ability to expand beyond recordkeeping.