The Advisor’s Guide to DB/DC Client Conversations

Let’s cut to the chase. If you’re an advisor, you’re already fielding questions about DB/DC plan combinations. These are among the most powerful tax and retirement savings tools available for high-income business owners, and yet many have never heard of them.

Defined Benefit plans and Defined Contribution plans each have distinct advantages. Used together, they can create significant tax efficiency, accelerate retirement savings, and give business owners more control over their financial future.

The complexity, though, is real. Get it right and you make a lasting positive impact. Get it wrong and you risk compliance issues, unnecessary costs, and damaged client trust. That’s where Retirement Plan Consultants (RPCs) from The Asteri Collective come in, helping you deliver the strategy, compliance, and plan design expertise your clients need while making you look like the trusted, forward-thinking partner they rely on.

Defined Benefit vs. Defined Contribution: Setting the Baseline

Share this cheat-sheet with clients:

  • Defined Benefit (DB) Plans promise a specific retirement income based on salary, years of service, and plan formulas. Employers fund the plan and bear the investment risk. Cash balance plans are the most common form in the small-business market today.
  • Defined Contribution (DC) Plans, including 401(k)s and profit-sharing plans, don’t guarantee a payout. Instead, employers and/or employees contribute, and the account balance depends on investment performance.

Used in tandem, DB and DC plans can deliver dramatically higher allowable contributions, larger current-year deductions, and faster retirement savings growth than either structure alone.

Why the DB/DC Combo Works

When designed properly, a DB/DC combination plan can allow high-income earners to contribute well over $200,000 annually, with most or all of those contributions being deductible to the business.

These plans can:

  • Prioritize benefits for owners and key employees while managing costs for the rest of the workforce.
  • Offer a powerful catch-up mechanism for clients who are behind on retirement savings.
  • Deliver owner-first economics, often producing a favorable ratio of benefits paid to owners vs. total plan costs.

The Role of the Plan Sponsor

In any retirement plan, the plan sponsor, typically the business owner or employer, is ultimately responsible for ensuring the plan complies with ERISA and IRS rules. This includes:

  • Selecting and monitoring service providers.
  • Ensuring the plan is operated according to its governing documents.
  • Meeting all reporting, disclosure, and fiduciary responsibilities.

Many plan sponsors underestimate this responsibility, assuming their recordkeeper, payroll provider, or even their advisor is “in charge.” The reality is that the liability rests with the sponsor, and one of the best risk management strategies is to engage a Retirement Plan Consultant who can manage the technical compliance and design work on their behalf.

Bundled vs. Unbundled: Managing Expectations

Bundled arrangements, where recordkeeping, plan administration, compliance, and sometimes investments are all provided by one firm, can work well for straightforward plan designs. They offer simplicity and one point of contact, but can be limited in investment flexibility and customization.

Unbundled arrangements separate these functions, allowing the plan sponsor to choose the best-in-class provider for each role. This flexibility is often critical for DB/DC combinations, complex ownership structures, or plans needing specialized investment strategies.

Fee compression has changed the dynamics. Recordkeepers, asset managers, and advisors are under pressure to do more with less. In a bundled model, RPC expertise is constrained by the limitations of the bundled provider. In an unbundled model, Asteri member firms can bring full design flexibility, integration with preferred recordkeepers, and alignment with the advisor’s investment strategy, all while ensuring compliance and operational efficiency.

Unbundled Plans with Custom Investment Options

One of the most valuable aspects of working with The Asteri Collective in an unbundled environment is our network of relationships with Defined Contribution Investment-Only (DCIO) providers.

In an unbundled plan:

  • DCIOs are not restricted by a bundled provider’s proprietary menu.
  • The RPC, advisor, and DCIO can collaborate to build a lineup that aligns with the plan’s objectives, the advisor’s strategy, and participant needs.
  • Plans can incorporate specialized strategies, from ESG screens to income-focused solutions, without being limited to a pre-set shelf.

Because The Asteri Collective operates nationally, we bring DCIO partners and recordkeepers into opportunities they might otherwise miss, while giving advisors a scalable, consistent partner in every market.

Why Advisors Should Source RPCs from The Asteri Collective

When you bring an Asteri Collective RPC into the conversation:

  • You’re getting national coverage with consistent service and compliance standards.
  • You’re aligning with a partner who understands both bundled and unbundled environments and can help choose the right structure for the client.
  • You’re adding technical depth without increasing your workload, our members handle the actuarial modeling, plan design, compliance testing, and documentation.
  • You’re reducing the risk to the plan sponsor by ensuring their fiduciary obligations are being met by a qualified expert.

We don’t replace you as the advisor, we amplify you. Our role is to make you the hero of the story while we handle the technical, operational, and compliance heavy lifting.

The Smarter, Scalable Approach

DB/DC combinations are one of the most powerful tools you can offer high-income business owners. But they require precision, integration, and ongoing oversight.

The smartest move for advisors? Bring The Asteri Collective to the table early, whether in a Zoom meeting or in person. We’ll partner with you to deliver the value, run the numbers, and lock in a strategy that meets the client’s goals while keeping the plan compliant, efficient, and designed to perform.

In an era of fee compression, increasing complexity, and heightened fiduciary awareness, sourcing your RPCs from The Asteri Collective isn’t just a good option, it’s the right one.