Filed Under:Life Insurance, Life Planning Strategies

DCIO assets still growing strong, but challenges mount

Currently, defined contribution investment-only assets total $2.7 trillion, up from $2.2 trillion a year ago.
Currently, defined contribution investment-only assets total $2.7 trillion, up from $2.2 trillion a year ago.

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.

Featured Video

Most Recent Videos

Behind the scenes with Vicki Gunvalson [VIDEO]


In this exclusive interview, Vicki Gunvalson shares how she built a $15 million a year annuity business by planning for...

Regulator: Market may need to reinvent LTCI


Cioppa says Maine's governor wants to spur the creation of better products.

Dementia: It's more than Alzheimer's


An association calls for policymakers to remember lesser-known neurodegenerative conditions.

Protesters Disrupt WellPoint Annual Meeting


Hecklers call for more disclosures of information about political contributions.

Related resources

More Resources


Power your business with up-to-the-minute insurance news, analysis, and best practices from LifeHealthPro Daily eNewsletter – FREE.

Power your business with LifeHealthPro Daily eNewsletter – FREE.

Enter a valid email address.
Nichole Morford

Nichole Morford
Managing Editor

Thank you for subscribing to LifeHealthPro Daily!

Check Out More eNewsletters Now! Close

Advertisement. Closing in 15 seconds.