Just how fast is the transition from asset accumulation to distribution (or decumulation) occurring?
Growth in the defined contribution investment only (DCIO) space has seen a precipitous drop in the 401(k) market, something that’s reflected in the hiring of sales distribution staff.
Ignites Retirement Research finds that 29 percent of DCIO managers surveyed plan to increase staffing in at least one distribution-related role. It’s down from 2014, when 54 percent of DCIO firms planned hiring in at least one distribution-related role.
Ignites defines sales-related headcount as external wholesalers, internal salespeople, key account/platform relations managers, portfolio manager proxies, marketing associates, and other roles.
“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,” Loren Fox, director of Ignites Retirement Research, said in a statement.
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 percent in 2015. The industry’s headwinds resulted in 53 percent 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,” according to Ignites. “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 percent—is devoted to plan advisors.”
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
