Products August 24, 2021

Franklin Templeton Partners With Stadion to Offer Personalized Managed Accounts

The growing trend toward personalization in retirement accounts motivated the partnership between the two firms, Todd Lacey, with Stadion, tells PLANSPONSOR.

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Franklin Templeton and Stadion Money Management have announced they have entered a partnership aimed at delivering personalized participant managed account solutions in the defined contribution (DC) marketplace.

Through the partnership, Stadion, a retirement plan managed account provider, will deliver technology and consulting services to support Franklin Templeton’s goals optimization engine (GOE), which offers personalized investment solutions to retirement plan participants.

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Todd Lacey, chief revenue officer at Stadion, spoke about the motivation behind the partnership in an interview with PLANSPONSOR.

“In the past couple of years, we’ve seen a lot of demand from different firms in the industry that want to offer a managed account service inside a retirement plan,” he said. “In order to do that, they need the tech to deploy that managed account to a recordkeeper. [Franklin Templeton] developed its own offering and it needed a tech partner to support that so the firm could distribute it through different recordkeepers.”

According to Franklin Templeton, GOE delivers individualized portfolio pathways based on a participant’s goals. With the ability to handle multiple investor goals, GOE uses probability of success as the driver for the initial asset allocation and each reallocation to maximize the likelihood of achieving the goal. Portfolio paths further adapt to client changes and market events. To enhance the GOE product, Stadion Technology will provide consulting and technology to advisers and asset managers entering the managed account and participant advice space.

Lacey says the growing trend toward personalization in retirement accounts motivated the partnership between the two firms. Rather than investing in a target-date fund (TDF) or selecting an all-purpose approach to investing, more participants are reaching for a tailored design, he says.

“Participants have clearly expressed a desire to have a more personalized experience, and we get that. Historically, retirement plan participants have not had access to personalization,” he notes. “They’ve had to select their own investments, and they’ve been pointed to a TDF, which is a one-size-fits-all option that’s based on age only or retirement date only, so that’s how it’s been done for years.”

He says managed accounts and an interest in more personalized approaches also tie in to the rise of digitalization and participants’ desire to manage their retirement accounts and investments on an online platform. With Stadion’s technology, for example, participants can add outside assets, risk tolerance or other key components about themselves that then allow Franklin Templeton to design a more tailored portfolio.

“Managed accounts have become more prominent because people not only want, but expect, a personalized experience,” Lacey says. “That comes in the form of a managed account, but it can also include the broader digital experience that a participant may have.” 

Looking forward, Lacey says he anticipates a further rise in personalization from employers and large-to-mega 401(k) providers. “This is further evidence that personalization is here and more of it is coming,” he says. “We’re just excited to be [Franklin Templeton’s] technology partner and to see how this grows.”

Break from the Grind August 24, 2021

Emotions and Investing Don’t Mix

Sixty-six percent of surveyed investors have made investment decisions based on emotions that they’ve later regretted, but fewer investors who use an adviser have done so than those who don’t use one.

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Two-thirds of investors surveyed by MagnifyMoney said they have made an impulsive or emotionally charged investing decision they later regretted.

This is more common for members of Generation Z (85% of those ages 18 to 24) and Millennials (73% of those ages 25 to 40) than Generation Xers (60% of those ages 41 to 55) and Baby Boomers (54% of those ages 56 to 75).

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The study of 1,116 U.S. consumers with an investment account found 37% have lost sleep worrying about the stock market, and 30% have cried over investing. The top reasons for tears include losing money in the stock market (43%), feeling overwhelmed (36%) and selling too early (34%).

However, investors who manage their portfolios on their own are more likely to make and regret impulsive investing decisions than those who let a financial adviser manage their portfolios. Of those who make their own investments, 71% have made a regrettable decision, compared with 59% of those who use an adviser.

Those who take investment decisions into their own hands are also more likely to struggle to keep their emotions out of it than those who use a financial adviser. Most investors (58%) agree that their portfolios perform better when emotions are left out of investing, but half of the investors who manage their own accounts report struggling to do this, compared with 45% of investors with financial advisers.

A financial adviser might not always help with feeling upset about investing, though, as the same percentage of investors who use an adviser as those who don’t report crying over investments.

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