Managed Accounts Manage Behavior Better


“To him who is in fear everything rustles.” – Sophocles

“You can’t depend on your eyes when your imagination is out of focus.” – Mark Twain

The stock market and investment returns really have a way of captivating our imagination. After all, for most people, investments are essential for bringing long-term financial goals within reach. On the other hand, the stock market can really torment us in the short term. It is one of the most powerful forces often distorting our long-term focus. Large swings in the Dow Jones Industrial Average or the S&P 500 can quickly inflict a state of myopia, even upon those most committed to a long-term investment program. We know that losses are more painful than gains are enjoyable [1].

The 401(k) industry has taken steps to hopefully alleviate these concerns by automating participant investing. Target-date funds (TDFs) are among the most popular vehicles for simple and easily accessible long-term retirement investing, and their use as a Qualified Default Investment Alternative (QDIA) make them attractive to retirement plans. Recent data suggests, however, that even TDFs are struggling to maintain an investor’s long-term focus during periods of market turbulence and fearful investor sentiment [2].

According to data offered by Aon Hewitt, “participant trading activity in January 2016 reached a three-year high, and 82 cents of every dollar traded moved from equity instruments to fixed-income funds.” Interestingly, the data also showed that “target date funds saw the most outflows, at 39% of all outflows, or $251 million.”

This data illustrates that—left to their own devices—it is still very difficult for investors to stick to a long-term plan during periods of fear and uncertainty.

That is why we believe a fully managed and auto-implemented managed account is the best default investment approach for delivering a personalized goals-based investment program to most 401(k) participants.

Unified Trust’s managed account solution, the UnifiedPlan, has guided participants through recent market turbulence with a steadfast commitment to their long-term retirement goals. Only about 0.25% of participants (2.5 in 1,000) opted into the managed account chose to opt out of the solution throughout the volatile month of January. Of those that opted out, more than half were caught by our asset allocation backstop, choosing to utilize one of our professionally managed risk-based models instead of building a custom allocation.

The UnifiedPlan’s status as a QDIA for our retirement plan clients helps to ensure that the best course of action is the default course of action for participants. This guidance, endorsed by the employer, the plan advisor, and by Unified Trust, cultivates trust and over 80% of participants utilize the service irrespective of which direction the market is moving—providing professional investment management precisely when it is most needed.


About Justin Morgan view all posts

Justin Morgan is the Managing Director of Plan Administration and Service, overseeing all aspects of plan administration and recordkeeping operations and providing leadership and strategic direction for the defined contribution business. He joined Unified Trust Company in 2005 and is a graduate of the University of Kentucky Carol College of Business & Economics, where he received a BBA in Finance. He has received the Qualified Pension Administrator (QPA), Qualified 401(k) Administrator (QKA), and Qualified Plan Financial Consultant (QPFC) credentials through ASPPA, as well as the Accredited Investment Fiduciary® (AIF®) designation awarded by the Center for Fiduciary Studies. As a member of the Trust Executive Committee and Trust Investment Committee, he is involved in establishing and executing short- and long-term business initiatives, as well as the development and implementation of the company's investment policy.