DCIO Business Sees Market Effects in ‘08

The average asset manager experienced a 23% drop in assets under management in 2008, according to a new survey of defined contribution investment-only (DCIO) executives by Sway Research LLC.

A Sway Research press release said the decline in DCIO assets, and subsequently management fee revenue, has forced a majority of DCIO managers to cut DCIO sales and marketing budgets for 2009 by an average of 18%.

In addition, Chris J. Brown, principal of Sway Research, said in the release that a number of strong forces make the DCIO market especially challenging in 2009, including the rise of target-date funds, increased flows to stable value and cash portfolios, pressure on management fees, and a lack of activity in terms of changes to DC plan investment menus.

Brown said in the announcement that DCIO sales executives still have reason to be positive. As noted in Sway’s recently published “Best Practices in DCIO Sales and Marketing,” the market share of investment-only assets continues to expand in the DC market, and is projected to reach 47% of DC assets in 2012, up from 44% in 2008 (see Fueled by Target-Date Growth, DCIO Firms Up Sales Efforts).

More information is available at www.swayresearch.com.