Dollar cost averaging is an investment strategy in which an investor contributes a fixed dollar amount at regular intervals, regardless of market price, resulting in the purchase of more shares when prices are low and fewer when prices are high. Over time, this approach can reduce the average cost per share and soften the emotional impact of market volatility, though it does not guarantee profit or protect against loss. In variable annuities and investment accounts, dollar cost averaging can help clients enter markets gradually rather than in a single lump sum.

Advisors recommend dollar cost averaging when clients are nervous about investing large sums in volatile markets or when funding retirement accounts over the year through payroll deductions or systematic transfers. Variable annuity platforms may offer automatic DCA programs that move money from fixed accounts into subaccounts over time. Compliance teams ensure that illustrations and discussions present DCA as a risk-management technique, not a guarantee. Understanding dollar cost averaging helps advisors position it as a behavioral tool that promotes disciplined investing aligned with long-term goals.