Managed Accounts are More Effective

Recently, PLANSPONSOR Magazine published their 2015 Defined Contribution Survey and in it was some very interesting data regarding managed accounts and outcomes.  One thing is very apparent in the survey; plans that use a managed account combined with an advisor acting in a fiduciary capacity have better results than plans not using these services.  The article below from PLANADVISER Magazine dives into the data a little deeper and focuses on average balances.  Managed Accounts – Plans with Managed Accounts have better outcomes These results very much correlate with my personal experience.  At Unified Trust, approximately 9 out of every 10 plans we bring on board are adopting our full suite of recommendations, most of which are paternalistic.   We suggest clients utilize automatic enrollment (starting at 6%), automatic deferral escalators and the UnifiedPlan® Managed Account Solution.  The results are astounding. Currently we see roughly 80% of participants stay in the defaulted managed account solution.  This solution provides the participants with the answers at enrollment rather than asking them to answer a series of complex questions such as:

When can I afford to retire?

Am I on track?

What will my monthly income be?

How much of that is from the plan, social security, outside assets and other sources of income?

What should my deferral rate be in order for me to get or stay on track? We are seeing 68% of those participants enrolled in the managed account solution on track for a fully funded benefit.  Most industry studies we’ve reviewed has the industry average at about 25% (lowest I’ve seen is 15%, highest is 40%).  The process of defaulting participants into a solution that delivers AND implements all of the answers is proven to be nearly three times more effective than traditional methods in delivering the outcome that matters most, retirement readiness. Whether it is outside studies like the PLANSPONSOR’s survey, or our first-hand experience, the results speak for themselves; the more that we as professionals take on ourselves and do for our clients, the better the results.

About Jason Grantz view all posts

Jason Grantz is an Institutional Retirement Consultant for Unified Trust Company serving the Mid-Atlantic and Northeastern areas of the United States. He is highly specialized in all aspects of retirement plan and pension consulting including plan design, operations, asset management, investments, fiduciary basics and advanced fiduciary plan governance.