DCIO Market at Risk of Losing Ground

Accordingly, Chatham said, future winners will have to increase platform distribution efficiencies, improve ROI measurement metrics, elevate brand positioning, and demonstrate product innovation in order ensure ongoing profitability – all discussed in the report, “Strategic Growth Opportunities in a Competitive Marketplace: Effectively Running a DCIO Business.”     

“Our research found that despite healthy asset growth over the past two years, these increases have been largely attributable to market returns – not to net cash flow,” said Luis Fleites, Vice President and study director.  “Upon deeper analysis of the results, we discovered that several operational areas will require greater management scrutiny in future years as the DCIO market begins to mature.  Unless managers develop metrics to closely examine their ROI in areas such as marketing, sales, and compensation, profitability is likely to begin to decline.”  

Chatham Partners’ research revealed that DCIO managers face challenges in differentiating themselves in the marketplace. Oftentimes, marketing efforts are leveraged through broader organizational resources and the messaging fails to create a unified firm-wide retirement message.  “The problem,” says Fleites, “is that the marketing strategies and approaches being utilized by these firms are not always aligned with this goal.”  

The study surveyed 19 asset managers ranging from $1 billion to over $50 billion in DCIO assets under management, along with several leading DCIO executive recruiters.  The study was designed to provide market and competitive insights and operational and profitability benchmarking into key dynamics of the DCIO market, including:  organizational structure, product, marketing, distribution, and business economics.