Let’s be honest: the label “managed account” has been broadly applied—some might say TOO broadly applied—in some cases to platforms that really are little more than expensive target-date funds.
Little wonder that a plurality of the advisor respondents to NAPA’s 2023 Summit Insider (for the second year running) saw managed accounts as a NEGATIVE game-changer. However, there’s no longer any excuse for that. 
It is recognized that target-date funds have done a commendable job of helping millions of novice (and even expert but busy) 401(k) savers invest in broadly diversified portfolios overseen and rebalanced regularly by professional investment managers.
Yet the apportionment of those investments, along with the glidepath on which those are established and rebalanced in target-date funds, is still based on a single demographic factor: Age. And even there, it’s generally no more precise than a broad five- or ten-year time frame that roughly approximates a traditional retirement age—which may or may not apply.
That means, of course, that those investment allocations are oblivious to key demographic considerations like gender (women tend to live longer), marital status (ditto married individuals), race, health, or other means of retirement income support—data fields that many recordkeeping platforms already maintain, or fields already contemplated by standard wealth management programs.
In other words, the data is there but ignored by target-date designs and, sadly, by many managed account platforms. Little wonder that in a fee-sensitive environment, plan fiduciaries remain skeptical about the efficacies of managed accounts and that “cost” was labeled the most significant hurdle for managed accounts by advisor-respondents to NAPA’s 2023 Summit Insider.
If your managed account solution only leverages a presumed retirement date, then chances are you’ve essentially made a fiduciary decision to invest in…an expensive target-date fund.
So, what keeps a managed account from being just an expensive target-date fund?
One word. With HUGE implications. PERSONALIZATION.
To live up to their promise and to the very premise of being a truly “managed” account, these platforms need to be personalized to the needs and circumstances of the individual 401(k) saver.
They need to look beyond a presumed retirement date, consider the wide range of demographic information already available on many recordkeeping platforms, and leverage the experience and expertise of advisors to obtain additional insights.
A target-date fund is a “one size fits all.” A managed account should be a size that fits YOU.
If it doesn’t, then the account holder, not the account, is being “managed.”
Just sayin.’
