The Managed Allocations solution enables financial advisers to bring customizable, professionally managed asset-allocation strategies to plan sponsors and participants. MassMutual provides recordkeeping for the managed account alternative, while BlackRock assumes fiduciary responsibility for designing and updating glide path models and asset allocations in client portfolios. BlackRock becomes a fiduciary under Section 3(38) of the Employee Retirement Income Security Act (ERISA) upon adoption of the Managed Allocations program.
The MassMutual Managed Allocations solution is available to sponsors of DC retirement plans with at least $15 million in assets, according to the firms.
“Advisers and plan sponsors want more control over the quality of the funds selected as part of the asset-allocation models, as well as the glide paths available within these investment strategies,” explains Eric Wietsma, senior vice president of sales and worksite education for MassMutual Retirement Services.
Greg Porteous, managing director of the BlackRock U.S. Retirement Group, says that Managed Allocations offers sponsors an “innovative and scalable custom target-date experience for plans that may not have the ability to go custom because of their size or the cost.”
The Managed Allocations program provides three glide path options, which include conservative, moderate and aggressive funds. This setup can help participants grow their assets and manage their savings to and through retirement, according to the firms.
The choice of glide path may hinge on a variety of considerations, including whether or not the plan sponsor offers a defined benefit pension or if the plan offers company stock as an investment option. Employee demographics, savings rates, and various other factors will also come into play, making the flexibility in asset class inclusion and the fiduciary oversight included in the Managed Allocations product attractive components for sponsors.
Managed Allocations is designed to be an alternative to MassMutual’s CustomChoice Strategies, an asset-allocation program that enables advisers who act in a fiduciary capacity to take a more active role in creating the allocations and glide paths used in client portfolios.
“MassMutual’s data on plan participants indicates that asset-allocation strategies and target-date funds are growing in popularity, especially with younger retirement savers,” Wietsma said. “Assets within these investment strategies have grown 39% in the past five years, indicating that investors are voting with their feet as returns rise.”
Sponsors seeking more information on Managed Allocations can consult their financial professional or call MassMutual at 1-800-874-2502, option 4.