DCIO Market at Risk of Losing Ground

August 1, 2011 (PLANSPONSOR.com) - While DCIO (Defined Contribution Investment-Only) assets continue to grow at a healthy pace, the industry is entering the early stages of maturity, according to a new study released by Chatham Partners.

Accordingly, Chatham said, the 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.      

“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 Vice President and study director Luis Fleites, in a press release.  “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.”  

Further, 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 research study, “Strategic Growth Opportunities in a Competitive Marketplace: Effectively Running a DCIO Business,” 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.   

For additional detail about this study, or for order inquiries, contact Luis Fleites at (781) 314-0607 or lfleites@chathampartners.net or visit the Chatham Partners Web site at http://www.chathampartners.com.