Products & Services June 13, 2025
What’s Next for Managed Accounts?
Technological evolutions could help the personalized options become more efficient—and more popular.
Reported by Mallika Mitra
Managed accounts have been an option in defined contribution plans for more than two decades, but with limited adoption and engagement, many think they are not being realized to their true potential.
As technology advances, so have the possibilities for managed accounts, which are able to fine-tune asset allocations based on details participants provide beyond their age, the typical basis for target-date funds.
“Target-date funds have been a spectacular way for participants to get portfolios for the last 20 years,” says David Blanchett, managing director, portfolio manager and head of retirement research at PGIM DC Solutions. “We’re seeing that these emerging technologies in all aspects of our lives allow for personalization at scale, and I think that’s what we’re going to see happening with managed accounts.”
“We get a great head start by using readily available recordkeeping data, such as participants’ savings behavior and retirement income sources—like a pension—to build personalized glide paths,” Brestowski says. “We can then further refine and evolve the glide path over time by engaging participants to capture their unique characteristics, like risk tolerance and retirement plans and goals.”
The Standard’s stance is that because managed accounts “may consider more participant details, such as income, gender, salary and deferral rate” they support “the development of a holistic investment and savings strategy … that better aligns to an individual’s desired retirement income goals,” according to a February online post.
While personalizing portfolios has been a focus for some time, Blanchett says current growth stems from non-portfolio services. Participants are now able to get more robust guidance on things such as how much to save for retirement and when they may be able to retire.
“What we’re seeing is the robo-tools becoming more like robo-advisers than just robo-investors,” Blanchett says.
Providers have started to address that issue with a new brand of personalized solutions sometimes referred to as personalized target-date funds, an emerging category within defined contribution accounts that combines the benefits of managed accounts with the simplicity and low cost of traditional target-date funds, according to Rene Martel, head of retirement at PIMCO. Because PTDFs optimize each participant’s asset allocation based on inputs already readily available on recordkeeper platforms, such as balance, salary and saving rate, a tailored asset allocation can be implemented without engagement.
PIMCO, for instance, launched its PTDT, myTDF, in 2021. T. Rowe Price’s TDF team introduced Personalized Retirement Manager last year.
Martel explains that from a provider standpoint, the technology and infrastructure used to deliver personalized TDFs is the same as what’s been used with TDFs. The difference is that instead of feeding national average inputs in the model, providers feed personalized inputs for each participant.
To make this scalable—effectively generating thousands of glide paths instead of the single, uniform glide path found in a traditional TDF—there is a layer of technology added to the production chain. That layer effectively serves as a bridge between the data that sit on the recordkeeper’s platform and the glide path engine of the personalized TDF provider.
Flexibility is key.
“The best programs recognize that not everything is known upfront,” says Kevin Knowles, head of personalized solutions and direct indexing at Russell Investments. “They design portfolios that are flexible and adaptive, utilizing intelligent assumptions and modeling to fill in the gaps, thereby ensuring participants receive a personalized experience.”
Providers are addressing the lack of engagement challenge, but Mikaylee O’Connor, a principal in and the head of defined contribution solutions at investment consulting firm NEPC, says the engagement from participants is essential.
“Without engagement, I’m not sure managed accounts are going to be worth the cost,” O’Connor says.
She adds that the area that really tends to move the needle in terms of client outcome is the incorporation of outside assets like individual retirement accounts and health savings accounts. While some recordkeepers like Fidelity Investments and Vanguard can automatically pull that information in from accounts they also recordkeep (subject to the participant’s approval), not all recordkeepers have access to that data. O’Connor says engagement is also necessary when it comes to retirement income goals and risk preference.
Take a provider who has high turnover, meaning many participants have only been in the plan for several years and have a high income, but a low balance. If they do not add their outside assets, the managed account engine could adjust their asset allocation based on the appearance of being underfunded and not on track for retirement, even if they really are, thanks to assets held outside the plan. The engine could also default participants into a moderate risk profile as opposed to one in line with their preferences, which could be more conservative or more aggressive, O’Connor adds.
“Right now, that looks like clicking on the webpage,” she adds. “People get overwhelmed.”
Another way managed accounts could help, and an area in which O’Connor says she is seeing some movement, is a subscription-based model that gives different participants an opportunity to engage how they see fit and pay for that additional service.
Meanwhile, Knowles says “the holy grail” is total household management.
“Personalization at each individual account or sleeve level provides a lot of value, but being able to consider entire households—asset types and vehicles—is where the industry needs to go,” he says. He adds that financial technology, in addition to the use of financial advisers, can help enable those offerings, and the fastest-growing financial advisers have been offering personalization across both investments and taxes.
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As technology advances, so have the possibilities for managed accounts, which are able to fine-tune asset allocations based on details participants provide beyond their age, the typical basis for target-date funds.
“Target-date funds have been a spectacular way for participants to get portfolios for the last 20 years,” says David Blanchett, managing director, portfolio manager and head of retirement research at PGIM DC Solutions. “We’re seeing that these emerging technologies in all aspects of our lives allow for personalization at scale, and I think that’s what we’re going to see happening with managed accounts.”
Benefits of Managed Accounts
The value of advice increases with personalization, says Amber Brestowski, Vanguard’s head of participant financial success.“We get a great head start by using readily available recordkeeping data, such as participants’ savings behavior and retirement income sources—like a pension—to build personalized glide paths,” Brestowski says. “We can then further refine and evolve the glide path over time by engaging participants to capture their unique characteristics, like risk tolerance and retirement plans and goals.”
The Standard’s stance is that because managed accounts “may consider more participant details, such as income, gender, salary and deferral rate” they support “the development of a holistic investment and savings strategy … that better aligns to an individual’s desired retirement income goals,” according to a February online post.
While personalizing portfolios has been a focus for some time, Blanchett says current growth stems from non-portfolio services. Participants are now able to get more robust guidance on things such as how much to save for retirement and when they may be able to retire.
“What we’re seeing is the robo-tools becoming more like robo-advisers than just robo-investors,” Blanchett says.
How Providers Personalize Without Engagement From Participants
Despite the potentially significant value that managed accounts can provide, adoption rates have remained low—and one of the main hurdles appears the need for participants to provide inputs and update them.Providers have started to address that issue with a new brand of personalized solutions sometimes referred to as personalized target-date funds, an emerging category within defined contribution accounts that combines the benefits of managed accounts with the simplicity and low cost of traditional target-date funds, according to Rene Martel, head of retirement at PIMCO. Because PTDFs optimize each participant’s asset allocation based on inputs already readily available on recordkeeper platforms, such as balance, salary and saving rate, a tailored asset allocation can be implemented without engagement.
PIMCO, for instance, launched its PTDT, myTDF, in 2021. T. Rowe Price’s TDF team introduced Personalized Retirement Manager last year.
Martel explains that from a provider standpoint, the technology and infrastructure used to deliver personalized TDFs is the same as what’s been used with TDFs. The difference is that instead of feeding national average inputs in the model, providers feed personalized inputs for each participant.
To make this scalable—effectively generating thousands of glide paths instead of the single, uniform glide path found in a traditional TDF—there is a layer of technology added to the production chain. That layer effectively serves as a bridge between the data that sit on the recordkeeper’s platform and the glide path engine of the personalized TDF provider.
Flexibility is key.
“The best programs recognize that not everything is known upfront,” says Kevin Knowles, head of personalized solutions and direct indexing at Russell Investments. “They design portfolios that are flexible and adaptive, utilizing intelligent assumptions and modeling to fill in the gaps, thereby ensuring participants receive a personalized experience.”
Providers are addressing the lack of engagement challenge, but Mikaylee O’Connor, a principal in and the head of defined contribution solutions at investment consulting firm NEPC, says the engagement from participants is essential.
“Without engagement, I’m not sure managed accounts are going to be worth the cost,” O’Connor says.
She adds that the area that really tends to move the needle in terms of client outcome is the incorporation of outside assets like individual retirement accounts and health savings accounts. While some recordkeepers like Fidelity Investments and Vanguard can automatically pull that information in from accounts they also recordkeep (subject to the participant’s approval), not all recordkeepers have access to that data. O’Connor says engagement is also necessary when it comes to retirement income goals and risk preference.
Take a provider who has high turnover, meaning many participants have only been in the plan for several years and have a high income, but a low balance. If they do not add their outside assets, the managed account engine could adjust their asset allocation based on the appearance of being underfunded and not on track for retirement, even if they really are, thanks to assets held outside the plan. The engine could also default participants into a moderate risk profile as opposed to one in line with their preferences, which could be more conservative or more aggressive, O’Connor adds.
Where Tech Evolution of Managed Accounts Should Go
Managed accounts certainly have the potential to improve outcomes. O’Connor says one way is using artificial intelligence to create a personalized chat engine that can help participants get a holistic picture of their finances and guide them to the best next steps.“Right now, that looks like clicking on the webpage,” she adds. “People get overwhelmed.”
Another way managed accounts could help, and an area in which O’Connor says she is seeing some movement, is a subscription-based model that gives different participants an opportunity to engage how they see fit and pay for that additional service.
Meanwhile, Knowles says “the holy grail” is total household management.
“Personalization at each individual account or sleeve level provides a lot of value, but being able to consider entire households—asset types and vehicles—is where the industry needs to go,” he says. He adds that financial technology, in addition to the use of financial advisers, can help enable those offerings, and the fastest-growing financial advisers have been offering personalization across both investments and taxes.
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