Outside voices and views for advisers

401(k) DCIOs: Some are folding, holding and doubling down

It behooves plan advisers to pay attention to their asset-management partners, because advisers rely on them for marketing and practice management support and guidance

Aug 16, 2017 @ 2:39 pm

By Fred Barstein

Editor's note: This story was updated on Aug. 18, based on additional information received from Russell Investments.

All segments of the 401(k) market are going through the early stages of maturity, led by record keepers and broker-dealers, with advisers and asset managers following. Maturity is causing money managers focused on the defined contribution market – the so-called defined contribution investment-only shops — to either hold, fold or double down.

Why? And why should advisers care?

DCIO success can come from owning a record keeper or having viable target-date or index funds. Only one firm, Vanguard, has all three, and, not coincidentally, is the leading DCIO. Firms like Fidelity, BlackRock, T. Rowe Price and American Funds have two of the keys to success, as do relatively new entrants SSgA and TIAA.

Firms like New York Life, BNY Mellon, Natixis, Russell Investments and, in previous years, Eaton Vance, Thornburg and Lord Abbett, have folded or pulled back from the DC market. There are signs some may re-enter, though more carefully.

According to Russell Investments, the firm recently hired industry veterans Jay Breitenkamp and John Uricchio as DC business development directors brought on board specifically because of their experience in working with DC specialist advisers and recordkeeping platforms. The firm said the number of wholesalers serving DC plan advisers is now the same as it was at the start of the year.

Others are holding steady even without any of the three success factors, by selling niche funds like fixed-income or leveraging their retail distribution. That's more realistic than trying to capture IRA rollovers, which few have done successfully, and will only get harder under the Department of Labor's fiduciary rule. These firms include Legg Mason, MFS, Invesco, Neuberger Berman, Franklin Templeton, Allianz, AB Global, Columbia, Goldman Sachs, Oppenheimer and Prudential.

And some DCIOs are doubling down on the DC market because they either have a record-keeper subsidiary — John Hancock, Voya, Putnam, Great-West and Nationwide — or, like First Eagle and Cohen & Steers, they believe they have a unique product. T. Rowe, SSgA and TIAA are making major investments in their DC businesses.

There are about 50 DCIOs, and all feel pressure to do something. With so much money coming from IRAs and 401(k) plans, the retirement market is difficult to ignore. Most of the largest money managers in the world have strong ties to it.

DCIO firms
AB GlobalFederatedJohn HancockPioneer
American CenturyFirst EagleLegg MasonPrudential
American FundsFisher InvestmentsLord AbbettPutnam
BlackRockRussell InvestmentsManning & NapierRidgeworth
BMOFranklin TempletonMFSSSgA
BNY MellonGoldman SachsNationwideT. Rowe Price
Cohen & SteersGreat-WestNatixisThornburg
ColumbiaHartfordNeuberger BermanTIAA
DFAInvescoNew York LifeVanguard
Eagle Asset ManagementIvy FundsOppenheimerVictory
Eaton VanceJanusPimcoVoya
Wells Fargo
Source: The Retirement Advisor University

What is crystal clear is that firms that do nothing are in the most dangerous position.

Advisers rely on DCIOs for marketing and practice management support and guidance. Only firms with healthy, positive net asset flows can afford to invest and support these activities, as well as hire the best and brightest who know what advisers really want. Pick your partners carefully because they may not be around tomorrow.

Fred Barstein is the founder and CEO of The Retirement Advisor University and The Plan Sponsor University. He is also a contributing editor for InvestmentNews' Retirement Plan Adviser newsletter.


What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Upcoming Event

May 02


Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in four cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Featured video


What's the first thing advisers should do when they get home from a conference?

After attending a financial services conference, advisers can be overwhelmed by options, choices and tools. What's the first thing they should do when they get back to their office?

Latest news & opinion

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

8 apps advisers love for getting stuff done

Smartphone apps that advisers are using in 2018 to run their business more efficiently.

Galvin's DOL fiduciary rule enforcement triggers industry plea for court decision

Plaintiffs warned the Fifth Circuit that Massachusetts' move against Scottrade signaled that the partially implemented regulation can raise costs for financial firms.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print