Now in its seventh year of publication, the PLANADVISER Defined Contribution Investment Only (DCIO) Survey shows a continued upward trend—albeit at a much slower pace than in previous years—for DCIO assets among the survey’s 42 participating providers. While not representative of this entire market, the survey can be seen as a proxy for the overall direction of DCIO asset levels and allocation. 

The participating investment firms supplied their year-end asset levels in DC plans for 2016 through the first quarter of this year. These asset levels rose $25 billion (0.5%) in the three months from December 31, 2017, through March 31, which may sound impressive but pales in comparison with a year ago: During that same three-month period, DCIO assets rose $163 billion (16.3%). However, the year-over-year increase from 2016 through 2017 was $685 billion, or 17.1%—compared with the $705 billion, 21.4%, increase from 2015 through 2016.

In terms of asset allocation by investment vehicle, the landscape continues to be stable. Mutual funds again dominate, comprising 61% of DCIO assets; 20% is in separately managed accounts and 18% in collective investment trusts (CITs). 

Similarly, allocation by investment type, which moved somewhat two years ago, did not change much. This year, an average of 54% of assets is invested in stocks—the same as in 2016. Stable value and money market funds remained at 8%, bonds at 18%, and asset allocation funds at 18%. 

Survey participants were also asked what they see as the biggest challenges defined contribution investment only firms face today. At the top of their list are two things: the consolidation of investment menus in defined contribution plans and, a perennial favorite, fee compression. The top opportunity, as indicated by the firms themselves, is the growing registered investment adviser (RIA) firm presence in larger plans, replacing traditional institutional investment consulting firms.

An overview of the DCIO industry can be seen here.

Art by Armando Veve