Investment Only Plan Services Seen as 2008 High Growth Area

April 25, 2008 ( - High profit margins in the defined contribution investment only segment of the retirement services business are likely to mean that plan sponsors will be getting more sales calls about DCIO services in the future.

That was a key conclusion of a new study by Newton, New Hampshire-based Sway Research which surveyed asset managers about the DC investment only market, according to a news release.

The announcement said providers are   earning average margins of 25% on DCIO business versus roughly 18% in markets such as mutual fund wrap and sub-advisory and only 12% on the separately managed account business, which also includes multiple-discipline products.Asset firm managers, acknowledging the potential profits in the segment, are planning to grow their sales efforts in 2008 by retaining their current sales staff and finding new staffers as needed.

“All of this is driving up compensation levels for sales people fortunate enough to possess a combination of ERISA (Employee Retirement Income Security Act) and investment product knowledge,” said Chris J. Brown, principal of Sway Research, in the news release.

The study was based on survey interviews with asset management firms.More information is at