Blog Managed Accounts Supplement 04 02 2025

Managed Accounts Supplement 04 02 2025

  • by Tom Kmak, Chief Executive Officer

  • Mar 26, 2025

A common question we get at Fiduciary Decisions is How Many Plans Offer Managed Accounts? The answer to that question is shown below and the conclusion is obvious:

Larger Plans are much more comfortable providing Managed Accounts to Participants. BUT we have seen an increase in Advisor Managed Accounts in the smaller end of the marketplace.

Percent of Plans

Why are larger plans sponsoring Managed Accounts at a greater rate? The answer to that lies in the impact that Managed Accounts can have on Retirement Incomes. For example, see the data below for a typical participant:

Factors

These assumptions produce a nice monthly income of $3,865 per month for the participant from their 401(k) plan. But the question is what will this amount become if the Managed Account can change behavior by doing the following:

 number1-1  Increase the deferral rate by 3% (from 6% to 9%)

 number2  Increase the rate of return by 1% (but reduced by .50% for the Managed Account Fee)

number3  Stop the pre-retirement distribution of $10,000 at age 50

number4  AND…what does the amount become if all 3 happen?

The answer to that is shown in the chart below. Bottom Line: If the Managed Account can truly change behavior, it can have a dramatic impact on the Monthly Retirement Income of the participant: from $3865 per month in the base case to $5494 in the Managed Account case (an increase of 42%).

Math

WE CAN HELP

Please share this supplement and the 5 Steps to Benchmarking Managed Accounts article with Plan Sponsors, Advisors and other service providers to encourage them to consider the impact that participant behavior and Managed Accounts can have on retirement outcomes.

Click here for the entire article: “Five Steps to Benchmark Managed Accounts.”

 

 

About Author:

Tom Kmak, Chief Executive Officer

Tom Kmak, Chief Executive Officer

Tom Kmak is the co-founder and Chief Executive Officer of Fiduciary Decisions (FDI, formerly Fiduciary Benchmarks). During his 16 years with the firm, FDI has become the industry’s leading firm for benchmarking retirement plans using a patented approach that recognizes the mathematical truth that “Fees Without Value is a Meaningless Comparison.” Tom is pleased to say that FDI’s benchmarking service is used by 70% of the largest and most prestigious Recordkeepers as well as over 60% of the best Retirement Plan Advisors as recognized by various industry publications. Tom has also been involved in the development of other services at Fiduciary Decisions, such as the Rollover Decision Support System supporting DOL PTE 2020-02, as well as the interactive plan design tool called the Retirement Outcomes Evaluator.

Prior to founding FDI, in 1990 Tom started the JPMorgan Retirement Plan Services business with American Century. Upon leaving in October 2007, that business employed 1,100 people serving two hundred large plan sponsors with over 1.5 million participants and more than $115 billion in assets. During his career with Retirement Plan Services, the company initiated numerous industry firsts including no blackout conversions and the innovative employee education program, Audience of One. Tom also served on the Executive Committee for JPMorgan’s asset management business.

Tom graduated Phi Beta Kappa from DePauw University with B.A. degrees in Economics and Computational Mathematics. He was the first graduate of the Management Fellows Program and a 3-year letterman in inter-collegiate basketball.

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