The US retirement market remains the largest in the world, with approximately $40 trillion in assets today and continued growth expected over the coming decade.1 At the same time, the industry is entering a period of structural change, driven by demographic and technological shifts, evolving regulation, and changing economics across the retirement value chain.
These developments create a pivotal moment for retirement solutions providers—also known as recordkeepers—and other stakeholders to reassess industry dynamics. McKinsey’s research points to four trends that could define the next era of the US retirement industry:
- AI and data capabilities are becoming competitive differentiators, with investment levels varying widely across the industry.
- Defined contribution (DC) plans are expanding beyond traditional investment options as new product categories gain traction.
- The boundaries between retirement and wealth management are blurring, creating new opportunities for collaboration and growth.
- Pooled employer plans (PEPs) and multiple employer plans (MEPs)2 are expanding, with plan consultants playing an increasingly important role in their growth and adoption.
Our perspectives are informed by proprietary research with critical stakeholders across the retirement ecosystem. McKinsey surveyed 75 US retirement plan consultants, including institutional consultants, retirement plan aggregators (RPAs), registered investment advisors (RIAs), and broker–dealers, with representation from plan sizes ranging from under $10 million to over $1 billion in assets. These consultants serve as gatekeepers, influencing which innovations reach plan participants and the pace at which they are adopted. They also play a central role in advising plan sponsors—the employers offering retirement plans to employees—on investment lineups, product selection, and recordkeeper selection. A September 2025 McKinsey survey of 11 of the 20 largest US recordkeepers also informs our perspectives and provides additional insight into AI investment and adoption across the industry.
AI and data capabilities are becoming competitive differentiators
AI has the potential to transform important operating and service workflows across retirement recordkeeping. By automating parts of the operating workflows such as sponsor onboarding, participant call-center support, and rollover requests, recordkeepers can scale service and support while limiting cost growth, helping protect margins despite continued fee pressure. For sponsors, AI can support faster, more tailored service by automating reporting, surfacing actionable plan insights, and proactively identifying and resolving operational issues.
These opportunities align closely with the factors our survey shows consultants prioritize when recommending recordkeepers—namely, fees, participant experience, and sponsor service and support (Exhibit 1).
Fees, participant experience, and plan sponsor service lead today’s recordkeeper recommendations.
Note: Based on responses from 75 individual consultants, each of whom could evaluate multiple plan segments. Question: When evaluating or recommending a recordkeeper for a client (plan sponsor), which factors are the most important in your decision for plan types on which you consult? Select up to 3.
As AI adoption accelerates, data security, governance, and cybersecurity are becoming baseline expectations for trusted providers. Approximately 57 percent of the responses of surveyed consultants show that AI capabilities and governance could play a larger role in recordkeeper evaluations over the next five years (Exhibit 2).
AI capabilities, data security, and investment flexibility could become more important in recordkeeper evaluations over the next five years.
Note: Based on responses from 75 individual consultants, each of whom could evaluate multiple plan segments. Question: Thinking about how your evaluation of recordkeepers may change over the next 5 years, which factors do you expect to see the most significant increase in their importance compared with their importance today when evaluating or recommending a recordkeeper for a client (plan sponsor)? Select up to 3.
Although recordkeepers recognize the imperative to invest in AI, many remain in the early stages of their AI journeys. In our survey of leading recordkeepers, 70 percent of respondents say they expect AI spending to double over the next two years. Yet only about 25 percent report launching AI initiatives at scale, and over half acknowledge that AI solutions are either not well integrated into their core workflows or not being used effectively by employees.
Closing this gap may require moving beyond pilots, isolated use cases, and stand-alone applications. Recordkeepers can consider identifying a small number of high-impact domains, such as participant engagement, sponsor support, or call-center operations, and redesigning them with AI. Lessons from these domains can then be scaled more broadly across the enterprise. Equally important, recordkeepers can consider investing in the foundational capabilities required to scale AI successfully, including building reusable technology components and ensuring access to high-quality data, robust governance, and effective workforce adoption. Ultimately, one objective could be to invest in creating modern, intuitive digital experiences for both participants and plan sponsors.
DC plans expand beyond traditional investment products
DC plans are expanding beyond traditional investment options, including through growing interest in alternative investments and the use of retirement income solutions for the decumulation phase. Plan consultants are playing an important role in shaping product design and adoption.
Alternative assets edge toward the mainstream
Alternative asset managers are increasingly turning to DC retirement plans as a new distribution channel, expanding access to investment strategies that have historically been available primarily to institutional and high-net-worth investors.3
This trend is reinforced by both regulatory developments and changing participant preferences. In March 2026, the US Department of Labor proposed a regulation4 that would help plan fiduciaries evaluate alternative investments in DC plans. At the same time, the expected transfer of wealth from baby boomers to Gen X and millennial heirs could fuel demand for higher-growth investment strategies among retirement savers with longer investment horizons. As one consultant told us: “Participants with 15 to 20 years until retirement are the ones really pushing for alternative assets.”
Consultants are increasingly receptive to this shift. Around 80 percent of surveyed consultants cite diversification as a primary rationale for incorporating alternative investments into DC plans, while 63 percent point to their potential to enhance returns. As one consultant at a leading retirement plan aggregator told us: “The traditional 60:40 equity-to-bond portfolio is becoming obsolete. We expect portfolios to move toward a 50:30:20 allocation across equities, bonds, and alternatives to improve diversification and return potential.”
Despite this enthusiasm, consultants expect adoption to be gradual. In the survey, nearly 70 percent of the responses showed that allocations to alternatives is expected to remain at or below 10 percent over the next five years (Exhibit 3).
Most consultants expect defined contribution plans to allocate 10 percent or less to alternatives over the next five years.
Note: Figures do not sum to 100%, because of rounding.
Note: Based on responses from 75 individual consultants, each of whom could evaluate multiple plan segments. Question: What do you see as the 5-year target allocation for alternatives in plans, as % of assets?
Two hurdles, in particular, stand out in terms of adoption (Exhibit 4).
Liquidity constraints and higher fees are seen as the top barriers to adding alternatives in defined contribution plans.
1Question: What are the top hurdles you see as limiting the addition of alternatives to defined contribution plans? Select up to 3.
2Defined contribution plans typically require daily liquidity and valuation, while alternative investments may have limited redemption windows and are generally valued monthly or quarterly.
Liquidity and valuation mismatch. DC plans require high liquidity levels, which can conflict with the long investment horizons of alternative assets that typically permit only limited periodic redemptions. They are also expected to provide daily net asset values, whereas private-market investments are generally valued monthly or quarterly. These constraints help explain why consultants favor vehicles that can combine liquid securities with alternative investments. Among surveyed consultants, 61 percent identify managed accounts as a preferred vehicle for introducing alternatives into DC plans, while 52 percent select target-date funds offered through third-party collective investment trusts. By comparison, only 24 percent select stand-alone alternative investments.
Fees and fiduciary concerns. Fees—and the fiduciary scrutiny around them—remain a significant barrier to broader adoption of alternative investments. Plan consultants told us that plan sponsors continue to view low investment management fees as an important component of their fiduciary responsibilities. Since private equity and other alternative investments typically carry higher fees than traditional investment options, sponsors are often concerned that including them in DC plans could increase litigation risk or expose them to questions about whether they have acted in participants’ best interests.
Recordkeepers are beginning to incorporate modest allocations to alternative investments into DC plans while meeting fiduciary, operational, and participant experience requirements. To that end, recordkeepers can consider taking four actions:
- Evaluate whether participant demographics and investment horizons support the demand for alternatives, and whether their technology, data infrastructure, custody arrangements, valuation processes, and liquidity management capabilities are equipped to support private-market assets.
- Evaluate product structures, including managed accounts and target-date funds, and determine whether to build capabilities in-house or partner with specialist asset managers.
- Assess the commercial opportunity by evaluating the scalability, adoption potential, economics, operational implications, and expected demand from plan sponsors and consultants.
- Develop an execution road map that prioritizes investments in systems, controls, participant education, distribution, and partnership models. Equally important is helping plan sponsors and participants understand the trade-offs associated with alternative investments, including higher fees, liquidity constraints, and limited redemption windows.
Retirement income solutions advance, though implementation remains gradual
Demand for retirement income solutions, such as target-date funds with embedded annuities, is rising as more Americans enter retirement. In 2026, the oldest baby boomers will turn 80. The COVID-19 pandemic also accelerated retirement, with research suggesting that more than 2.4 million additional people had likely retired by August 2021 relative to the prepandemic trend.5
Yet, many retirees remain financially unprepared. A 2021–22 McKinsey survey of more than 9,000 US households found that as many as 80 percent of baby boomers may not be adequately prepared for retirement, with their concerns compounded by volatile markets, persistent inflation, and rising healthcare costs.6
These demographic and economic pressures are increasing the demand for decumulation solutions. Among plans that already offer retirement income options, 83 percent of plan consultants report at least some participant interest in in-plan income features.
Adoption is likely to be gradual. Most plan consultants (72 percent of the sample set) expect no more than 25 percent of the DC retirement plans they advise to offer an in-plan retirement income solution within the next two to three years (Exhibit 5). Technology integration remains the leading barrier, cited by 56 percent of respondents.
Most consultants expect in-plan retirement income adoption to reach no more than 25 percent of clients within the next two to three years.
Note: Figures do not sum to 100%, because of rounding.
1Question: What share of your defined contribution recordkeeping clients do you expect will offer an in-plan retirement income option within 2–3 years?
Greater adoption may depend in part on recordkeepers developing reliable, cost-effective capabilities that support plan administration, portability, and a seamless participant experience. Retirement income product manufacturers can complement these efforts by providing operational support to recordkeepers, including integration capabilities and coordinated participant education efforts.
The boundary between retirement and wealth is blurring
In recent years, the retirement and wealth management industries have increasingly converged, with recordkeepers diversifying their revenue beyond plan administration, and participant demand for advice continuing to rise. Total revenues generated from the DC system—including investment products and recordkeeping—grew from $28 billion in 2013 to $39 billion in 2023. Over the same period, the DC system created $45 billion in new revenues from retail wealth management.7
As recordkeepers expand their wealth management businesses, plan consultants can become either partners or competitors. The relationship may depend on the degree of overlap between their respective wealth offerings: The greater the overlap, the higher the likelihood of competition; the smaller the overlap, the stronger the opportunity for partnership. Our research points to three common relationship models, depending on the type of plan consultant:
- Institutional consultants are the least likely to offer participant-level wealth management services. Only 4 percent of surveyed consultants view recordkeepers as competition, while the vast majority see them as potential partners.
- RIAs and RPAs occupy a middle ground. They typically focus their wealth offerings on higher-net-worth participants, creating less overlap with recordkeepers, which today primarily serve the mass and mass-affluent segments. Only 32 percent view recordkeepers’ wealth businesses as competitive, while 59 percent see opportunities for partnership.
- Broker–dealers, by contrast, are more likely to view recordkeepers as competitors because their wealth offerings often target the same mass and mass-affluent segments. Nearly half of broker–dealer consultants view recordkeepers’ wealth businesses as competitive.
Despite some overlap in their wealth offerings, collaboration among consultants and recordkeepers is already common. Nearly 71 percent of RPA/RIA consultants and a similar percentage of broker–dealer consultants report working with recordkeepers to provide participant wealth management services (Exhibit 6).
More than two-thirds of consultants are partnering with recordkeepers on wealth management or exploring such partnerships.
1Question: How would you describe your firm’s current level of partnership with recordkeepers on participant wealth or advice services (eg, referrals, cobranded solutions, integrated advice offerings)?
One emerging model is segmented participant servicing, in which consultants and recordkeepers focus on different participant segments based on wealth and financial complexity. Recordkeepers can serve mass and mass-affluent participants through standardized digital tools and advice solutions, while consultants can focus on higher-net-worth participants who require more personalized wealth management solutions. This approach allows both groups to strengthen their value propositions while providing participants with the level of support most appropriate to their needs throughout the retirement journey.
Recordkeepers can tailor their wealth strategies to different consultant segments to maintain their competitive edge. They can also align with the consultants on roles, economics, and participant handoffs, supported by clear governance for data sharing and participant communications. Equally important are scalable capabilities that support joint servicing, including secure data controls and a seamless transition from retirement planning to wealth management.
PEPs and MEPs expand as plan consultants take on a greater role
The rise of shared plan structures such as PEPs and MEPs has made it easier for smaller employers in the United States to offer retirement benefits at scale. These arrangements provide access to institutional-quality plan governance, fiduciary support, investment oversight, and better economics that may be harder to achieve through stand-alone plans.
The SECURE 2.0 Act, enacted in 2022, made PEPs more accessible to employers with smaller workforces by providing start-up tax credits for new adopters and allowing 403(b) plans to participate. The PEP market continues to grow, with assets more than doubling from 2022 to 2023 to nearly $12 billion, followed by an additional $9 billion in 2024.8
Plan consultants are positioning themselves at the center of this growing market. Around 85 percent of survey respondents who advise on PEPs expect PEP recommendations to increase (Exhibit 7). Our research shows that many consultants are also moving beyond their traditional advisory role by developing capabilities to serve as pooled plan providers, assuming administrative and fiduciary responsibilities while partnering with recordkeepers and trustees.
The majority of consultants expect moderate growth in pooled employer plan recommendations.
Note: Figures do not sum to 100%, because of rounding.
1Question: For your client base (or former client base if no longer practicing), what change do you expect in PEP plan recommendations?
2Do not advise on PEPs.
As consultants play a larger role in the PEP ecosystem, recordkeepers can consider two actions. First, they can deepen partnerships with consultant-led aggregators across market segments, viewing them not only as partners for large plans but also as important distribution channels for PEP adoption. Second, they can invest in purpose-built recordkeeping platforms designed to support the operational needs of PEPs, including the ability to service multiple employers within a unified plan structure. Depending on their starting point, recordkeepers may choose to build, buy, or partner to close the capability gap, improve cost efficiency, and strengthen their position.
For recordkeepers, this shift is part of a broader trend in which consultants are becoming increasingly important gatekeepers across the retirement ecosystem. According to Cerulli Associates, 85 percent of plan sponsors work with an advisor or consultant.9 Against this backdrop, 86 percent of consultants in our survey expect their influence to remain stable or increase over the next three to five years, reinforcing the view that consultants see their role continuing to expand (Exhibit 8).
Consultant influence on retirement plan decisions is expected to remain steady or increase across most plan segments.
Note: N can be superior to number of consultants surveyed, as consultants were asked to report on all plan segments they were familiar with.
1Question: In the next 3–5 years, how do you see the plan consultant role and influence evolve in the final decision?
As consultants’ influence grows, earning a place on their short lists will become increasingly important for asset managers, recordkeepers, and insurers. Building deep relationships across consultant segments—not only those serving large plans—could become a critical source of competitive advantage.
Capabilities that could shape the next era
The US retirement system is becoming more integrated and increasingly focused on participant outcomes. Plan consultants could play a central role in shaping that future, but they are only one of several forces—alongside technology, product innovation, regulatory change, and the convergence of retirement and wealth—that are reshaping the industry’s competitive landscape.
For ecosystem players seeking to win, three considerations emerge from our research:
- Treat technology and trust as table stakes. AI capabilities, participant experience, and data security are becoming baseline expectations. Providers will need to identify a small number of high-impact domains and redesign them with AI while establishing robust governance that protects participants and plan sponsors.
- Pair product innovation with distribution strategy. Alternatives and retirement income will scale only when manufacturers, recordkeepers, and consultants align on product structures, fiduciary responsibilities, and economic incentives. Innovation without a clear distribution path is unlikely to achieve broad adoption.
- Build to win in wealth. The boundary between retirement and wealth will continue to blur. Providers that can serve participants throughout the full journey, from accumulation to rollover and decumulation, will be best positioned to capture value. For many, achieving this will require partnerships rather than going it alone.
The next era of US retirement will be defined by those that build the capabilities, partnerships, and product offerings that anticipate participants’ evolving needs, with plan consultants playing a pivotal role in shaping sponsor decisions, and ultimately, participant access.
