In the first in a series of four papers that the Defined Contribution Institutional Investment Association (DCIIA) will publish on managed accounts, the organization offers an overview of the key aspects of managed account programs today.
The primer includes a review of the basics of managed accounts, a summary of their usage over time, a description of how they can be offered and considerations for determining if they are right for a particular defined contribution (DC) plan, and, if so, in what ways.
In the publication, DCIIA says the use of managed accounts in DC plans is on the rise. Managed accounts may have the potential to add value for DC plan participants, but they also come with additional costs to participants, it notes. “Plan sponsors should therefore carefully consider whether a managed account program is suitable for their plan and its participants, and, if desirable, should prudently select its managed account provider,” the primer says.
Future papers in the series will address due diligence and implementation considerations; the potential benefits and challenges of managed accounts from the viewpoint of a fiduciary committee deciding between managed accounts and target-date funds (TDFs) as a plan’s default option; and the results of a request to managed account providers to provide recommended asset allocations for a variety of different participant profiles.The first paper, “Managed Accounts: A Primer,” is available here.