New Service Broadens Access to Tailored Advice

To date, managed account services have typically been available only on single-recordkeeper platforms—meaning advisers to plans that offer the accounts had to work with multiple providers.

Three years ago, for instance, financial services firm Morningstar Inc. rolled out its managed account service with Schwab Retirement Plan Services Inc. as the only recordkeeper, notes Jim Smith, Morningstar’s head of workplace strategy and business development. In last year’s fourth quarter, though, Morningstar developed a prototype that can work with any recordkeeper platform; five large registered investment adviser (RIA) firms immediately signed up, with CAPTRUST as the first, Smith says.

He says offering managed account services provides an adviser with a number of benefits—such as enabling him to advise potentially hundreds of participants. “CAPTRUST, for instance, focuses primarily on wealth management and defined contribution [DC] plans, and its advisers have been very good at catering to the C-suite,” Smith says. “What they’ve wanted is a way to scale this advice to people who don’t have as large of a balance.”

This new service will let the advisers bring their expertise at building personalized portfolios to a wider base of participants.

“They’ll now be able to seamlessly offer advice to wealth management clients and DC plans,” Smith notes. He adds that managed accounts were able to draw together only about four data points about participants in 2007. Today, that is nine to 10. “A number of RIA firms have realized that 401(k) plans are now getting more data on individuals, so we can do a better job of personalizing advice on an individual level.”