2019
PLANADVISER DCIO Survey

Now in its eighth year of publication, the PLANADVISER Defined Contribution Investment Only (DCIO) Survey shows a continued upward trend for DCIO assets— albeit at a much slower pace than in previous years—among the survey’s 38 participating providers. While not representative of this entire market, the survey can be seen as a proxy for the overall direction of DCIO asset levels and allocation.

The participating investment firms provided their year-end asset levels in defined contribution plans for 2017 through the first quarter of this year. The year-over-year DCIO assets from 2017 through 2018 dropped $161 billion, or 3.5%—compared with the $649 billion, a 16% increase from 2016 through 2017—but the drop in total assets was largely driven by poor market returns in late 2018. Conversely, Q1 2019 has been much more favorable and asset growth has dwarfed that of the prior year, rising $448 billion from December 31, to this March 31, vs. only $25.3 billion during the comparable period last year.

As to asset allocation by investment vehicle, the landscape remains stable. Mutual funds again dominate, comprising 60.5% of DCIO assets; 19.5% is in separately managed accounts and 19.5% in collective investment trusts (CITs). By contrast, allocation by investment type saw some movement. In this year’s survey, respondents reported an average of 49% of assets invested in stocks, vs. 54% in last year’s survey. Stable value and money market funds moved from 8% to 11%, while bond allocations and asset-allocation funds stayed flat.

Many DCIO firms work closely with financial advisers who cater to the defined contribution market. In order to differentiate themselves, more than eight in 10 DCIO companies will hold due diligence meetings (85%), and 77% offer investment committee meetings, conferences for advisers and research to advisers. Yet, only 31% of firms provide access to ERISA [Employee Retirement Income Security Act] counsel, and just 23% will sponsor designations/certifications. —Quinn Keeler

Art by Valeria Petrone