Although managed accounts are available to better than half of plan participants, a recent Cerulli report notes that participant adoption remains limited. But what’s the take — and take up rate — among NAPA Net readers?
Among this week’s respondents, just over half were already using a managed account offering as part of their practice, with about a third planning to do so, and the rest were not. Among those who were using them, more than 75% of their plan sponsor clients were using the managed account options.
Those who used them were generally inclined to use them in place of, not alongside, target-date fund options. And while a minority said their preference for approach depended on the individual situation, most of this week’s respondents expressed a preference for managed account designs over TDFs.
“I use TDFs where I need to, but I am not a fan,” noted one reader, who went on to note that, “I prefer risk-based allocation funds and plan to present a managed account option in that space while at the same time offering individual managed accounts via my proprietary RIA.”
One reader noted that their managed accounts use ETFs, “which reduce the fees to 24 bps to 39 bps for the managed accounts.” Additionally, they noted that “managed accounts with ETFs do not have multiple shares classes, sub-TA fees, 12b-1 fees, or short term redemption fees like mutual funds.”
“Target-date funds do not address the most important variable — the savings rate,” noted another.
On the other hand, one reader noted that “managed accounts charge extra fees and I really don’t see proof that they can really outperform TDFs.”
Thanks to everyone who participated in this week’s NAPA Net reader poll!
Got a question you’d like to run past the readership? A burning issue you’d like to vet out with your peers? Post it in the comments section below — or email me at [email protected].
