Tall Order
PLANADVISER’s inaugural Defined Contribution Investment Only (DCIO) Survey represents more than $1 trillion in DCIO assets as of the end of the first quarter 2012. While the survey does not represent the entire DCIO industry (yet), it does give insight into some of its players and a sense of their size, and also the products and services they offer to the advisers who are critical to the distribution of their funds into defined contribution (DC) plans.
Value-added services for advisers abound among DCIO managers: Fully, 82% of the managers make research available, 79% conduct due diligence meetings and just over two-thirds (68%) offer practice management services. Adviser training in the sales and servicing of DC plans is offered by 65% of DCIO managers, and almost the same percentage (62%) conduct adviser-focused conferences.
Only about half (56%) of DCIO managers offer plan benchmarking tools; the same percentage provide investment committee meetings. Less than half offer DC plan lead generation (41%), access to ERISA [Employee Retirement Income Security Act] counsel (24%), compliance support (21%) or sponsorship of designations/certifications (21%). Nearly all (89%) make portfolio managers available, but many do so only under certain circumstances.
DCIO managers, on average, have selling agreements with more than 50 recordkeepers—when asked which firms are their top recordkeeping relationships in terms of DC assets, Fidelity is among the top five for most (80%). The next most frequently appearing recordkeepers in the top five for DCIO assets are Great-West (43%), Bank of America (40%), Wells Fargo (34%) and Schwab (31%).
Survey respondents were also asked to identify their biggest challenges and best opportunities in the DCIO market. Two-thirds (66%) indicated that “gatekeeper access and getting on the short list” was the biggest challenge, and just 3% cited “third-party fiduciary limitations.” In terms of opportunities, a clear standout was not as apparent: One-third of managers cited custom target-date funds, and 24% of managers indicated “growing RIA firm presence in larger plans.” The same percentage cited “providing thought leadership.”
2012 DCIO Provider Survey: PLANADVISER’s first annual survey of DCIO providers was conducted in April. Referencing a list, supplied by Strategic Insight, of the largest mutual fund managers by assets, we sent to approximately 123 providers an email directly linking to the survey questionnaire, and invited others to participate via a link in the PLANADVISERdash daily newsletter. This list is for reference only and is not comprehensive of the entire DCIO industry, as many major providers chose not to participate this year. We expect to expand this survey—both on www.planadviser.com, immediately, and in future issues of the magazine. For more information, or to participate now or in future surveys, please email surveys@planadviser.com.