Sales Staff Growth at DCIO Firms Slow
NEW YORK, NY, September 7, 2016 -- Facing slow growth in the DC market, Defined Contribution Investment Only (DCIO) providers plan expect to increase sales-related headcount by only 4% this year, according to the latest findings of Ignites Retirement Research, a Financial Times (FT) service.
The sales-related headcount includes external salespeople, or wholesalers; internal salespeople; key account/platform relations managers; portfolio manager proxies; marketing associates; and other roles.
Only 29% of the DCIO managers we surveyed plan to increase staffing further in at least one distribution-related role. By contrast, that's down from 2014, when an earlier survey by Ignites Retirement Research found that 54% of DCIO firms planned hiring in at least one distribution-related role.
These findings, and more, are contained in Ignites Retirement Research's new report, Trends in DCIO Staffing Strategy. The report examines how DCIO managers are staffing their sales efforts, prioritizing responsibilities among distribution staffers and structuring compensation for sales personnel.
Staffing plans are based on Ignites Retirement Research's survey of 17 DCIO firms managing a total of $652 billion in retail DCIO assets as of Dec. 31, 2015.
"Two factors account for the moderate pace of DCIO sales hiring: many DCIO firms had increased their headcount at a faster pace in 2010-2013, especially in the hiring of internal wholesalers; and the DCIO market has been growing at only a moderate rate for many managers," says Loren Fox, director of Ignites Retirement Research and co-author of the report.
Flat to slightly down plan performance, coupled with rising withdrawals from DC plans by retiring baby boomers meant the DC plan market grew by just 1.5% in 2015. The industry's headwinds resulted in 53% of the surveyed DCIO firms seeing their DCIO assets under management decline over the course of 2015.
The staffing of DCIO distribution teams and assigning of their responsibilities is particularly critical now, as these firms prepare for the Jan. 1, 2018, full implementation of the Department of Labor's new fiduciary rule. The expected increase in regulation of DC plan advising should have a significant effect because plan advisors are the most important audience for DCIO providers. The biggest block of DCIO sales teams' time -- 47% -- is devoted to plan advisors, Ignites Retirement Research found.
About Ignites Retirement Research
Ignites Retirement Research is dedicated to helping DCIO teams optimize their exposure and use in employer-sponsored retirement plans. Our specialized reports provide valuable insight and actionable recommendations based on proprietary surveys of retirement plan advisors, fund executives, plan sponsors and others. To learn more about Ignites Research, please visit www.ignites-research.com
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