Background: In spring 2024, DCIIA hosted roundtable discussions with a diverse group of plan sponsors, bringing together nearly two dozen employers to explore the dynamic topic of managed accounts within defined contribution (DC) plans. The conversation took a broader perspective on the benefits and challenges of managed accounts, rather than focusing on specific providers or offerings. This complex topic elicited varied perspectives, demonstrating that managed accounts are far from one-dimensional. RRC members can visit the member site to read the full report.

Findings: More than half of the employers in attendance currently offer managed accounts to their participants, most as an elective, opt-in option. Some key takeaways include:

While managed accounts offer valuable support to certain participants, particularly older workers and those with more complex financial needs, not all employers

view them as a universal solution.

Customization and leveraging personalization was a major challenge noted by many employers. Plan sponsors stressed the importance of metrics to track the level of engagement and personalization.

Fees were, of course, discussed at length. The cost-benefit was particularly noted when participants do not personalize their recommendation. However, value was also noted to be subjective, and one employer stated, “comfort is value” and another indicated, “who are we to say that’s wrong if it brings peace of mind.”

It is important to consider how managed accounts fit into the overall benefits and goals of the plan. One employer noted, “We’re building a house, and we need to think about what rooms and additions we’re adding onto it.”

The solution is viewed as supportive of financial wellness solutions, and part of a broader toolkit, with a significant benefit of being able to speak with an advisor.

Working closely with the managed account provider is critical to ensure integration of broader benefits and manage the communication and messaging to plan participants.

Notably, among employers that do not currently offer managed accounts, many indicate that they are looking for “proof points” as to the benefits before implementing. Further, some noted that negative preconceived notions from decision-makers internally can be challenging and it can be difficult to dissuade them from these views.

Bottom Line: The discussions at the roundtable highlighted the need for employers to carefully consider how managed accounts fit within their overall benefits strategy.

Employers emphasized the importance of seamless integration with other plan offerings, active management of communication with participants, and ongoing evaluation of fees and engagement metrics. Ultimately, managed accounts remain a valuable tool in supporting employees, but their success depends on thoughtful implementation, ongoing management, and appropriate employee engagement.