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Portfolio > Asset Managers

DCIO assets still growing strong, but challenges mount

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Growth of the defined contribution investment-only (DCIO) market continues to outpace that of the DC plan market overall. Today, DCIO assets total $2.7 trillion, up from $2.2 trillion a year ago. Hearts & Wallets projects this will grow to $3.6 trillion in 2018, which means DCIO assets will make up 49 percent of the total DC market at that time, up from 46 percent today.

This is just one finding from Hearts & Wallets’ latest in-depth study of the DCIO market, The State of DCIO Distribution: 2014—Assessing and Refining Strategy in Light of a Rapidly Evolving Market.”

The DCIO market has been fertile ground for asset and revenue growth for more than a decade, with dozens of managers establishing dedicated DCIO sales and marketing efforts to capture a share of the now $5.8 trillion DC market. With so many managers vying for face-time at industry events and in the offices of provider gatekeepers and leading intermediaries, it has become extremely difficult to break through the clutter and get products slotted into plan menus.

“Complicating this is a group of leading managers, many of which were early entrants to the market, that are vastly outspending their peers on DCIO sales staff and marketing, and in return, are capturing a greater share of the available assets,” said Chris Brown, Hearts & Wallets principal. “These firms benefit from strong brands, extensive distributor relationships and sales forces, and sizable DCIO asset bases, which generate greater revenue and allow for larger DCIO sales and marketing budgets.”

Each year, H&W breaks the survey participants into three groups based on DCIO AUM and sales and marketing resources. This year, Tier 1 segment managers are spending nearly twice as much on DCIO sales and marketing as Tier 2 managers and nearly 1.5 times as much as those in Tier 3, on average.

Yet, when these expenditures are compared to annual gross sales, Tier 1 managers are making a smaller investment relative to the assets taken in than Tiers 2 and 3 managers. Meanwhile, larger staffs and marketing outlays breed even more sales and an ever-widening gap between Tier 1 managers and those trying to reach this status.


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