Managed Accounts
Managed accounts are becoming slightly more prevalent in retirement plans, and when plans use one as their qualified default investment alternative (QDIA) and also work with an adviser, they have noticeably higher balances than plans without an adviser. They are also more likely to have a default deferral rate greater than 4%.
About one-third of today’s plans now offer a managed account, whether they have an adviser or not, according to the 2015 PLANSPONSOR Defined Contribution (DC) Survey; 31.3% of plans without an adviser and 32.1% of plans with one use a managed account. Perhaps because of the adviser engagement with managed account options, plans with an adviser are twice as likely to have one of these accounts for the QDIA as plans without an adviser (7.7% vs. 3.5%); when the adviser acts as a 3(38) fiduciary, 9.5% of plans have a managed account as the default.
Having a retirement plan adviser plus a managed account as the QDIA appears to improve outcomes for participants across various metrics: deferral rates and higher balances, specifically. Plans with a managed account as the QDIA and that work with an adviser have higher deferral rates than plans without an adviser (6.7% vs. 5.4%). Plans with a managed account as the QDIA and that work with an adviser are also more likely to have a default deferral rate higher than 4%; 42.1% of such plans have a higher default deferral rate, compared with only 11.1% of plans without an adviser.
Balances of plans with a managed account as the QDIA and that are overseen by an adviser also have average balances 22% higher than plans without an adviser ($98,206 vs. $77,007).
Use of Managed Accounts
| QDIA = MANAGED ACCOUNT | PLAN OFFERS MANAGED ACCOUNT | |
| With an adviser | 7.70% | 32.10% |
| 3(38) fiduciary | 9.50% | 37.30% |
| 3(21) fiduciary | 6.30% | 32.90% |
| Don’t know | 11.50% | 34.90% |
| Without an adviser | 3.50% | 31.30% |
| Deferral Rates | |||
| QDIA = MANAGED ACCOUNT | QDIA = Other | ||
| With an adviser | 6.70% | 6.40% | |
| 3(38) fiduciary | 6.20% | 6.50% | |
| 3(21) fiduciary | 7.00% | 6.70% | |
| Don’t know | 6.40% | 6.00% | |
| Without an adviser | 5.40% | 6.50% | |
| Average Balance | |||
| QDIA = MANAGED ACCOUNT | QDIA = Other | ||
| With an adviser | $98,206 | $84,892 | |
| 3(38) fiduciary | $83,252 | $92,075 | |
| 3(21) fiduciary | $93,993 | $93,826 | |
| Don’t know | $94,669 | $71,911 | |
| Without an adviser | $77,007 | $85,796 | |
| Default Deferral | |||
| QDIA = MANAGED ACCOUNT | QDIA = Other | ||
| With an adviser | 42.10% | 27.40% | |
| 3(38) fiduciary | 31.30% | 32.70% | |
| 3(21) fiduciary | 44.40% | 29.00% | |
| Don’t know | 50.00% | 25.50% | |
| Without an adviser | 11.10% | 29.00% | |
| Source: 2015 PLANSPONSOR Defined Contribution Survey | |||