Managed Accounts Supplement 04 02 2025

Written by Tom Kmak, Chief Executive Officer | Mar 26, 2025 4:09:20 PM

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.

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:

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:

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

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

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

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%).

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.”

View full post