Improvements Can Be Made to Better Protect Participants in Managed Accounts
Below is an excerpt from an article posted on TowersWatson.com that really resonates with us here at iSectors. It takes a deep dive and asks if managed accounts make for a better qualified default investment alternative (QDIA) in retirement plans, which we believe is a worthwhile question to ask.
“Managed accounts can be useful services and may offer some advantages for [DC plans]. They build diversified portfolios for participants, help them make investment decisions, select appropriate asset allocations and estimate the amount they need to contribute to achieve a secure retirement. Given these potential advantages, it is no surprise that the number of managed account providers has grown and that plan sponsors, seeking to provide the best options for plan participants, have increasingly offered managed accounts. The extent to which managed accounts benefit participants may depend on the participant’s level of engagement and ability to increase their savings. Despite the potential advantages, better protections are needed to ensure that participants realize their retirement goals. These protections are especially important as additional fees for this service can slow or erode participants’ accumulated retirement savings over time.”