The age of personalization has arrived. Data-driven personalization is enhancing shopping, traveling and even retirement investing. The one-to-many construct of target date funds (traditionally the most utilized retirement investment vehicle) is being gradually disrupted by the one-to-one personalization of managed account solutions. With participant-specific information more readily available than ever, managed accounts have the ability to tailor investment strategies to the characteristics of each participant in a way that target date funds cannot. This strong link to each participant’s situation is an important advantage relative to other QDIA options and properly-designed managed accounts will continue to gain popularity as QDIAs because of it.
This paper discusses the changes to DC plans over the past several years and what the use of managed accounts can offer plan sponsors and their participants.