PLANADVISER -May/June 2022 - 26

research / 2022 PLANADVISER DCIO Survey
lead on investment decisions, and the end result is that it
has become far more important for the DCIO providers to
work to get onto those lists.
" The industry is looking for very thoughtful relationships
where like-minded advisers and wholesalers understand
their plans and their value add, " says Tim Kohn, head
of the retirement distribution group at Dimensional Fund
Advisors in Austin, Texas. " The industry is going through
this dance right now to figure out who are the best halfdozen
organizations to work with. I don't see DCIO shops
working with everyone at the same level. "
The Shift to CITs
Another result of continued industry consolidation is the rise
of collective investment trusts, as DCIO providers look to offer
relationship pricing-i.e., more favorable pricing, including
the ability to purchase funds at scale-to larger adviser
firms. " Our view is that we're not asking for better prices than
is anyone else, but we also don't want to be undercut by a
competitor that can come in and get the fund for cheaper, "
Esselman says. " The relationship-pricing conversations all
have a different flavor, which is interesting to see, but these
are clearly important, and [DCIO providers] are approaching
us more often than we're approaching them. "
While mutual funds still comprise the bulk of DCIO
assets, CITs have been steadily gaining market share. As of
last October, CITs had 34% of DCIO market share, up from
28% in 2018, Sway research found. With more than $2 trillion
in assets under management last year, CIT products
could overtake mutual funds in DCIO asset share by the end
of 2025, Sway projected.
That trend does not surprise Keenehan, who says for years
his clients have been focused on making sure their advisers
are aware of the lowest-cost versions of funds and are benchDCIO
Assets ($b)
Total
DC
assets
$9,086
$8,337
$7,468
DCIO
assets
$6,086
$3,995
$4,644
$4,482
$4,982
$7,119
$5,685
$6,134
$10,975
marking the fees and performance of recordkeepers' services.
" So now that means shifting them out of mutual funds and
into collective investment trusts, " he says.
Ken Barnes, an investment consultant with SageView
Advisors in Glen Allen, Virginia, says his firm has moved
more small and midsize plans into CITs over the past year,
whereas previously only the largest plans made that transition.
" We've put a lot of time and effort into working on relationship
pricing and how to leverage our scale with different
investment managers to negotiate lower investments costs
for our clients. And a lot more of our clients have become
receptive to CITs, " Barnes says.
Marrying Income and TDFs
Although target-date funds remain the default option for
the vast majority of 401(k) plans-e.g., among plans with a
QDIA, 97% of the alternatives chosen were target-date funds,
Vanguard found-some plan advisers are talking to plan
sponsors about potential changes to how the target-date fund
is structured, such as the introduction of income solutions,
Barnes says. And, while there is a growing awareness that
plan sponsors and participants are looking for ways to allow
for lifetime income, there is no consensus yet on the best
approach, he says.
" I don't think the perfect solution is out there yet, "
Keenehan says. " Everyone wants to be ahead of the curve
and come up with one of the most successful solutions, but
there are still a number of challenges, including pricing,
portability and simplification of these strategies. "
The shift toward income products will get an additional
boost in some plans when a provision from 2019's Setting
Every Community Up for Retirement Enhancement Act
goes into effect in September. This requires that a disclosure
appear on participants' statements, at least once in any
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26 | planadviser.com May-June 2022
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PLANADVISER -May/June 2022

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