Measuring Managed Accounts’ Appeal Across Age Groups

Whether the attraction is personalized features or access to advice, interest in managed accounts within defined contribution plans has increased. Overall, 43.6% of plan sponsors offered a professionally managed account as an investment vehicle within their organization’s DC plan in 2026, up from 38% in 2024, according to the PLANSPONSOR Defined Contribution Benchmarking Survey, published by PLANSPONSOR, the sister publication of PLANADVISER.

As adoption increases, plan advisers and sponsors are still grappling with which participants stand to benefit most from managed accounts. Morningstar research suggests that, contrary to conventional assumptions, some of the most significant benefits may work in favor of younger investors.

Researchers at Morningstar, a managed account provider, simulated participant outcomes in which money was invested via managed accounts, target-date funds and self-directed portfolios. They found that managed accounts led to an overall increase of 7.7% in participants’ median lifetime wealth ratios—calculated by dividing current net worth by lifetime income—at age 65.

Hypothetical participants who adopted managed accounts in their early 20s saw the largest increases in lifetime wealth ratios—9.9% among TDF investors and more than 22% for those with self-directed portfolios.

Yet despite research suggesting younger investors may benefit the most, industry experts caution that age alone is an imperfect measure of a managed accounts’ value.

“Managed accounts can create value for participants at every stage, but the nature of the value can differ by age,” says Liana Magner, executive vice president and U.S. head of retirement and institutional for Natixis Investment Managers. “Because a managed account asset allocation is personalized to each individual’s personal financial situation, you could argue that older participants may benefit more from the personalization aspect of a managed account.”

Time Is on Younger Investors’ Side

While older participants may derive greater value from the complexity-managing features of managed accounts, younger investors have a different advantage: a longer time horizon to act on personalized advice.

“Participants in a managed account program tend to have higher savings rates,” Magner says. “If somebody starts in a managed account program at a younger age and they’re encouraged to save earlier [and] they’re saving more and that’s compounding the returns in their investment portfolio, over the long term, they’re going to end up with a higher balance.”

Edelman Financial Engines’ chief planning officer, Michael Liersch, echoed that view in an email to PLANADVISER, arguing that the value of financial advice extends across age groups.

“Our data show managed account participants have higher average savings rates across every age group, and there are a range of empirically driven studies that speak to the broader behavioral benefits of financial advice,” he wrote.

Edelman is the largest managed account provider for retirement plans, according to Cerulli Associates’ “Managed Accounts 2026” report. As of the first quarter of 2026, Edelman reported $248 billion in assets in more than 1 million managed accounts.

“Many of our managed account clients are 50 or older, which makes intuitive sense. Considerations like retirement timing, Social Security, healthcare, taxes and turning savings into income all start to converge, which often leads to individuals seeking assistance,” wrote Liersch. “But younger participants have something that is arguably more powerful on their side: time. Earlier guidance around saving and investing can give them more opportunities to make adjustments and benefit from those decisions over the course of their careers.”

Explaining Managed Accounts to Participants

Those differing sources of value underscore a challenge for plan sponsors and advisers: explaining managed accounts to participants in a way that resonates with each age demographic.

“Think about life stage, not just age,” Liersch wrote. “A 28-year-old establishing savings habits has very different needs from a 58-year-old deciding when to retire, but both may benefit from personalized help.”

Beyond communicating the benefits of personalization, advisers and sponsors must also address one of the most common barriers to adoption: fees. According to Sean McCaffery, principal and senior defined contribution research specialist at Fiducient Advisors, a Wealthspire company, these fees often drive investors away from the tool.

“Younger participants do seem to have a greater willingness to engage with the solution, which can only be beneficial. The flip side of that is … that there’s a fee component to it,” McCaffery says. “I don’t know if all 25-year-olds are that different from each other, where customization is really as much value-add as it could be for the older cohort, but yet they’re paying the additional expense for this ability to customize and engage with the solution. That could certainly be a detriment or a headwind.”

Fee concerns have long been cited as one factor limiting broader adoption of managed accounts, particularly among participants with less-complex financial circumstances.

“It’s harder to benchmark managed accounts,” Magner says. “There is a standardized benchmark for target-date funds, so all of the TDFs have a nice benchmark to compare against, and then you can compare against the peers. But managed accounts, because they are personalized portfolios, don’t have standard benchmarks. It’s hard to say: Does the personalization of the asset allocation alone justify the additional fee to justify that cost?”

According to Liersch, the fees are often a sound investment.

“Just as we evaluate whether any purchase is ‘worth it’, we need to consider the value for cost on a personal level,” Liersch wrote. “While there are well-documented cases for the generalized value of financial advice, that is a very personal calculation.”

Even when participants perceive sufficient value, access remains another hurdle, according to McCaffery, since managed accounts are typically implemented through recordkeeping platforms.

“Nearly all recordkeepers only offer one or two different providers. It feels very much like the early days of target-date funds, where it’s a proprietary solution and maybe one third-party solution,” he says. “It’ll be interesting to see if recordkeepers, which act as the gatekeepers here, will offer more managed account solutions or more managed account provider solutions in the future.”

Managed account providers and recordkeepers may also benefit from the ability to personalize fees based on how much participants interact with and customize the tools. That could benefit younger investors, who may use fewer features, more than older participants.

“If I’m somebody that engages with it in a limited fashion, can I pay a lower fee than somebody that wants to utilize all the bells and whistles and therefore pay a higher amount?” McCaffery asks. “I don’t know that I’ve seen managed account providers willing to step into that type of structure just yet. It seems to make sense philosophically; I don’t know if [it does] operationally.”