401(k) Managed Accounts: A Misunderstood Value Proposition
May 16, 2024
This research explores the opportunity to improve retirement confidence through increased participant adoption of DC managed accounts.
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Many 401(k) plan participants stand to benefit from the highly personal, holistic investment management and retirement investment strategy offered through defined contribution (DC) managed account programs. Roughly half (47%) of DC managed account users express confidence in their retirement strategy vs. fewer than one-fifth (16%) of non-advice users.
Yet, despite the wide-ranging benefits, participant adoption of DC managed accounts remains low. Cerulli‘s latest research, issued with support from Edelman Financial Engines, explores the barriers to adoption and outlines clear steps plan sponsors can take to improve engagement.
Employer-Vetted Advice Solutions
The portion of plan participants that prefers an employer-vetted financial advice solution (53%) roughly doubles the portion that prefers the go-it-alone approach (27%). Participants recognize that their employer is able to conduct a more thorough/ rigorous due diligence process.
Participants Value Human-to-Human Interactions
Approximately one in three 401(k) participants who use an advice solution indicate that the most beneficial aspect of using one is the increased reassurance (and reduced financial stress) related to their finances.
Demystifying the 401(k) Experience
Plan sponsors have a clear incentive to promote simpler, more effective participant messaging and positioning of their DC managed account programs. Moreover, when communicating the value of their managed account programs to participants, plan sponsors should frame a manage account as an employee benefit as opposed to an “investment product.”
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Meet Our Experts
Research Authors
Elizabeth Chiffer
Analyst
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Elizabeth Chiffer
Analyst
As an analyst on the Retirement team, Elizabeth supports research on defined contribution and individual account markets and provides quantitative support to the annual reports and Cerulli Edge series.
Prior to joining Cerulli, Elizabeth was a research assistant at the Boston University School of Hospitality Administration, where she worked on papers pertaining to hospitality finance and technology.
Full biography here.
Shawn O'Brien, CFA
Director
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Shawn O'Brien, CFA
Director
Shawn oversees the Retirement practice at Cerulli Associates. In this role, Shawn oversees and mentors a team of analysts responsible for publishing research on the trends in defined contribution (DC) and IRA markets. Additionally, Shawn provides strategic oversight to Cerulli’s consulting projects focused on opportunities in the retirement space. Shawn frequently speaks at industry summits and conferences. Shawn is also responsible for overseeing the firm’s Data Analytics team.
Prior to joining Cerulli Associates, Shawn was a researcher at Harvard Business School where he co-authored case studies alongside professors Adi Sunderam and Luis M. Viceira focused on investment management for individual and institutional investors. Shawn started his career in investment operations at SSgA where he covered the firm’s equity collective investment trusts and institutional separate accounts.
Full biography here.
Brendan Powers, CFA
Director
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Brendan Powers, CFA
Director
Brendan is a member of Cerulli’s Product Development practice, which focuses on trends related to asset managers’ product development and management functions. This broadly includes assessing the opportunity for product development, evaluating emerging product trends, and understanding distribution and product positioning for investment products across retail and institutional channels.
Prior to joining Cerulli, Brendan worked as a Senior Client Associate at Eaton Vance Management, focusing primarily on the firm’s exchange funds.
Full biography here.
James Tamposi, CFA
Associate Director
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James Tamposi, CFA
Associate Director
James (Jack) is the lead author of Cerulli’s North American Institutional Markets report and sets the agenda for The Cerulli Edge—U.S. Institutional Edition. Jack has led U.S. market entry strategy and U.S. institutional pricing optimization projects, supporting both foreign and domestic asset managers. During his time at Cerulli, he has contributed to reports across Cerulli’s suite of institutional research, focusing on topics such as insurance general accounts, outsourced chief investment officers, alternative investments, and U.S. subadvisory.
Prior to joining Cerulli, Jack worked as a Research Associate for Chatham Partners.
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