NAPA Net - Polling Places 052121

(How) Are You Managing Managed Accounts?

Last week, we focused on target-date funds, specifically their composition and glidepaths. But that survey spurred a number of reader questions – about managed accounts, and how they fit in.

A recent report by Cerulli Associates notes that, as of the fourth quarter of 2020, the top nine DC managed account providers comprised more than $400 billon in DC assets and the vast majority of DC recordkeepers now partner with at least one managed account provider. Moreover, more than four-in-ten plans with at least $250 million in assets offer a managed account (28% do overall, according to the report), and 17% of plan sponsors overall plan to offer a managed account in the next 12 months.

The simplicity of target-date funds has always been something of an Achilles’ Heel – the reality that truly effective asset allocation requires more than an approximate retirement date – and yet it’s that simplicity that has also allowed them to be incredibly effective at garnering assets and adoption by defined contribution retirement programs.

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* 1. Do you use both target-date funds and managed accounts in your practice?

Yes, we use both.

No, just target-date funds.

No, just managed accounts.

Neither target-date funds nor managed accounts.

Any comments?

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* 2. Do any of the plans you work with default participants into managed accounts?

Yes, most of them.

Yes, some of them.

Yes, a few of them.

Yes, one of them.

No.

Not yet, but it's under consideration.

Any comments?

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* 3. If they do default participants into managed accounts, what information do they gather in order to do so (check all that apply)?

Age/retirement date.

risk tolerance.

other assets.

Gender

Race

None of that - really more of a balanced account structure.

None of my clients default participants into managed accounts.

Any comments?

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* 4. Do you think managed accounts will replace target-date funds?

Yes, eventually.

Yes, for some accounts.

Yes, but mostly among larger clients.

Yes, but mostly for participants with larger balances.

Not likely.

Not in any significant numbers.

Not sure.

Comments on what you see as the trend(s) here?

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* 5. What do you wish participants/plan sponsors understood (more) about managed accounts?

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* 6. Other comments about managed accounts, managed accounts versus target-date funds, the evolution of managed accounts, the current dominance of target-date funds, the (relative) complexity of managed accounts, the growing popularity of managed accounts, the interest (or lack thereof) in managed accounts, the advantages of managed accounts, the disadvantages of managed accounts, what plan fiduciaries don't know about managed accounts, the use of managed accounts as default investment options, or life in general?

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* 7. What is your role working with retirement plans?

Advisor

Provider

TPA

Plan sponsor

Recordkeeper

Wholesaler

Consultant

Other (please specify)

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* 8. What size plans do you work with PRIMARILY?

Under $10 million in assets

$10-$20 million

$20-$50 million

$50-100 million

$100 million - $250 million

$250 million - $500 million

Above $500 million

Other (please specify)

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* 9. Suggestions for future survey questions? Seriously - what would you like to know about/from your fellow NAPA-Net readers? Or what would you like to be asked?

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* 10. All responses are confidential, of course - but just in case you would like a response - or want me to know you responded - or just want to say hi - here's your chance to do so (don't forget your email)!