Managed accounts are professionally managed and personalized portfolios that address the needs, preferences, risk tolerance, and situation of an individual DC plan participant. Managed accounts are a relatively new offering for retirement plans, mostly adopted within the past decade. Managed accounts have continually evolved over time. The lack of a track record has until now been a hurdle blocking wider usage and appreciation. However, significant changes in recent years mean the topic warrants review:
- Costs are trending lower,
- Improvements in technology and data collection lead to better access to participant information,
- Plan sponsors are placing greater emphasis on more holistic personal financial well-being of employees,
- Managed account solutions are more widely available from numerous providers, leading to greater competition, improved affordability, and acceptance.
To qualify for fiduciary protection, the onus is on plan sponsors to prudently select and monitor providers and to document the results through committee minutes or other official records. The guide lists seven critical questions to answer in the evaluation.
