Aside from offering diversified and professionally managed portfolios, managed accounts may also add value relative to other commonly used asset allocation strategies, according to a recent report by SageView Advisory Group.
Although these arrangements can add cost and complexity to a traditional fund lineup, they can also provide a unique solution for retirement savers that is significantly more customized than an off-the-shelf balanced or target-date fund, according to the July 2018 white paper, “Managed Accounts Within Defined Contribution Plans.”
Author Mallory Armijo, CFA, reviews several considerations to take into account when evaluating whether a managed account is appropriate for a particular plan. She explains, among other things, that sponsors will need to conduct a robust due diligence process, including evaluating employee demographics to determine whether a managed account is likely to add significant value to the group.
Armijo emphasizes that, while managed accounts are a complex solution that may not be a good fit for all plan sponsors, they offer some unique benefits that may be worth considering.
Other SageView white papers are posted here.