FRC Predicts DCIO Market Growth

According to an FRC report, “Exploring New Retirement Strategies: Maximizing Resources When Targeting DCIO Opportunities,” asset managers have an enhanced likelihood of growing assets within the competitive and complex Defined Contribution Investment-Only (DCIO) market if they employ multi-pronged strategies. These strategies include employing informative value-added marketing tools, as well as offering appropriate and differentiated products and pricing to pursue profitable platform opportunities. In tandem with these efforts, DCIO managers need to differentiate their products and service capabilities.   

“Even among the largest firms, what’s clear is that to effectively grow assets, investment managers need a distribution strategy and a value proposition that distinguish their firms’ offering from competing investments,” said Bob Hedges, FRC’s Chairman, in a press release.   

FRC’s study also examined the drivers of growth of the defined contribution marketplace, and noted especially the predictability of inflows through automatic enrollment, the addition of investments to fund menus to augment plan options, and a shifting regulatory environment as key factors on the upside.   

“What we are seeing is that lifecycle funds, ETFs and stable value funds will undoubtedly have an impact on the opportunities for fund managers in the retirement market going forward,” said Hedges. “Target date funds, in particular, present both opportunities as well as challenges for asset managers, given their prominence as a qualified default investment alternative, balanced by the proprietary structure of target date offerings.”   

Other key topics covered in the report include European opportunities for DCIO providers, potential impacts of regulatory changes, and DCIO market data.