Managed accounts emerging on the 401(k) scene for plan sponsors

Managed accounts are emerging on the 401(k) scene for plan sponsors, but not everyone believes these funds are a panacea for employees.

The Government Accountability Office released a report this summer that pointed out a variety of areas for providers to improve — for instance, fees can range from $8 to $100 on every $10,000 in a participant’s account. The agency also took the Labor Department to task for not requiring providers to share performance and benchmarking data for managed accounts.

But popularity of managed accounts — which enable plan sponsors to use portfolio customization in an effort to improve employees’ retirement savings — is on the rise. An alternative to “set it and forget it” target-date funds — a mainstay of many plan fund menus — a number of firms are creating customized portfolios for retirement plan participants based on the standalone funds already available in a 401(k)’s menu and savings data gleaned from a plan’s record keeper, or from employees who are interested in signing up.


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