Managed Accounts and the Power of Personalization: Selling Points for Advisors
Managed accounts have been an option in defined contribution plans for more than 20 years. So why talk about them now?
The answer is simple: several factors are reshaping how individuals invest and plan for retirement—and managed accounts are uniquely positioned to meet their evolving needs.
Advice to last a lifetime
The demand for personalized portfolio solutions—such as managed accounts—is growing. In part, that’s because more retirement plan participants are seeking advice for meeting a lifetime of financial needs and goals. This may be especially true in the small business market, where access to personalized advice within retirement plans is often limited.
Additionally, as employees age, they’re looking to employers for help in preparing for retirement. In fact, 52% of plan participants say they would like the ability to speak to a financial professional to help them talk through financial challenges.1
Further stoking interest among plan sponsors and plan participants is the compression of managed account fees, which are aligning more closely with those for target date funds.
Leverage the opportunity
If you're not actively prospecting with managed accounts, here’s what you need to know:
- Defined contribution plans hold more than $10 trillion in assets.2
- Managed account assets are expected to reach $15.6 trillion by 2026, exceeding a 13% annual growth rate over the next 4 years.3
- While 48.8% of retirement plans offered a managed account service in 2022, compared with 36.3% in 2019,4 it's expected that 80% of plan sponsors will offer a managed account solution by 2030.5
Expand your reach, amplify your impact
Offering access to a full range of investment choices that includes managed account services can help amplify your value as a trusted advisor by enabling you to provide advice not just to your clients, but their participants, too.
A managed account service can put you in contact with business owners and key executives who may be interested in more comprehensive wealth management services. It may also open the door to reaching plan participants who might not have been obvious prospects but who may hold significant assets outside their workplace retirement plan.
A managed account solution may also help mitigate fiduciary responsibility for you and/or your plan sponsor client. Many managed account providers offer 3(38) services, while enabling you to maintain investment oversight.
For these and other reasons, we’ve seen sustained interest in managed accounts both from advisors and plan sponsors. This includes questions about managed accounts as a qualified default investment alternative (QDIA) and, more recently, the evolution of so-called “dynamic QDIAs.” Dynamic QDIAs combine the benefits of target date funds with managed accounts to provide a more tailored investment experience across a plan participant’s lifespan. And as managed accounts continue to evolve, advisors and plan sponsors will have even more choices for meeting different participant needs.
Partner with an expert
At Ascensus, our purpose-built technology enables us to partner with leading managed account providers and investment firms so you can deliver the personalized managed account solutions that are best suited to each client’s needs, goals, and participants. We provide tools and resources you and your clients need to understand how managed accounts can help drive better outcomes.
Learn more
For more on the value of managed account solutions, download our latest whitepaper, Managed Accounts and the Power of Personalization and be sure to share it with your current and prospective clients.
Schedule a call to discuss how we can help you proactively address the increasing interest in more personalized portfolio solutions.
Let’s get there together.
1 The Benefits of Personalization in Defined Contribution Plans, Cerulli Associates. October 2023. https://www.cerulli.com/resource/the-benefits-of-personalization-in-defined-contribution-plans
The Future of DC: Personalized Investing, Wilshire, November 28, 2023. https://www.wilshire.com/product-literature/the-future-of-dc-personalized-investing
2U.S. Managed Accounts 2023. Cerulli. https://www.cerulli.com/reports/us-managed-accounts-2023#:~:text=Managed%20account%20assets%20are%20expected,over%20the%20next%20four%20years.
3 Defined Contributions Plans Climb for 4th Straight Quarter. PLANSPONSOR, September 26, 2023. https://www.plansponsor.com/defined-contribution-plans-climb-for-4th-straight-quarter/
4 Plan Sponsors Should Be Intentional When Adding Managed Accounts, PLANSPONSOR, January 2, 2024/ https://www.plansponsor.com/plan-sponsors-should-be-intentional-when-adding-managed-accounts/
5 The Future of DC: Personalized Investing, Wilshire, November 28, 2023. https://www.wilshire.com/product-literature/the-future-of-dc-personalized-investing
