NAPA Net’s DC Investment Only (DCIO) list is provided below. Last updated in December 2013, the list groups providers into three tiers:
Tier 1
• Either:
— More than eight DCIO wholesalers
— Flowing +$500 million per year/DCIO wholesaler
— Significant value add
— On most if not all national record keeper platforms
• Or:
— legacy business with substantial assets that may not meet all of the criteria
Tier 2
• At least three DCIO wholesalers
• On some record keeper platforms
• Some but mostly limited value add
Tier 3 (providers not listed)
• May have an R share
• Limited if any DCIO wholesalers
• Main platforms are through clearing firms like Matrix which service independent record keeping TPAs
• No value add
What’s New
There have been some significant changes in the industry since was last updated in May 2013. Updates and highlights since then include:
• Allianz hired a DCIO sales manager — a new position, indicating plans for growth.
• American Funds hired two DCIO specialists from Mercer and T. Rowe Price, marking their first official foray into the DCIO world.
• BMO came out with new share classes for some funds, indicating a move as a DCIO.
• Nationwide is now a DCIO as well as a record keeper firm.
• T. Rowe Price hired a full suite of DCIO wholesalers.
Entering the DCIO market is relatively easy compared with record keeping, with less investment required in technology and people, especially wholesalers. But being competitive is hard — hiring and maintaining a robust distribution team is very expensive, as is creating a worthwhile value add program.
In addition, record keepers and advisors are relying more on their DCIO partners to support their businesses, and it’s becoming harder to get on a platform, especially for the more popular products. Becoming a Tier 1 provider is nearly impossible, with JP Morgan, which started their DCIO effort in 2008, one of the last entrants into that elite group.
While there is less of a threat of a DCIO exiting the business than there is with record keepers, it’s important for advisors to select DCIO partners that have the commitment, experienced staff, support and value added services that can really help advisors to build, grow and service their business. Otherwise, advisors might as well select no-load funds — of which there are thousands to choose from — from a spreadsheet, based purely on quantitative data.
The current list, updated in December 2013, is provided below. For a pdf of the list, click here. And please let us know if there are any providers missing from the list, if any information is not correct or if we missed any updates.
