Managed Accounts Gaining Popularity

Plan sponsors are seeking managed accounts not only to provide personalized retirement solutions, but also for fiduciary protection in an increasingly complex regulatory environment, Sangeeta Moorjani, senior vice president of Fidelity’s Professional Services Group, told PLANSPONSOR.

Fidelity Portfolio Advisory Service at Work (PAS-W)—the company’s proprietary managed account offering for workplace retirement accounts—increased both participants and assets by 50% or more in 2012. Enrolled participants in the service grew by 57% in 2012 to 63,000 participants.

The growth in Fidelity’s managed accounts is indicative of a larger industry trend, according to Fidelity. “With increased concerns about market volatility and investor uncertainty, both plan sponsors and their participants are opting for a more personal experience that provides management for their retirement portfolios customized to their plan lineup,” Moorjani said.

In 2008, PLANSPONSOR’s DC Survey found only 20.7% of plans offered managed accounts, compared with 2012, when managed account use was at 32.9% for the year across all industries and market sizes (see “Managed Accounts: Personalized Attention”).  

Moorjani said Fidelity sees all types of companies request managed accounts, ranging from strategic to small and mid-sized to tax-exempt clients. “This is because employers recognize that their employees need additional support to help them more effectively save for retirement,” she noted. According to Fidelity data, 56% of plan sponsor participants may not be properly allocated and 88% do not rebalance.

Fidelity clients have said they prefer managed accounts because employees need additional fund options that are not part of their typical retirement plan menu, Moorjani added.