What Are Managed Retirement Accounts? A Plan Sponsor Guide

Managed retirement accounts have surged—growing about 22% in the past year—as plan sponsors replace one-size-fits-all fund lineups with portfolios tuned to each participant’s financial profile. These solutions deliver goal-focused allocations that rebalance automatically and adapt to changes in age, salary, and risk tolerance.

This guide equips plan sponsors with a clear roadmap: you’ll find a precise definition of managed retirement accounts, an overview of ERISA fiduciary roles and QDIA safe harbors, a breakdown of benefits for both sponsors and participants, side-by-side comparisons of leading providers (including Summit Consulting Group’s independent fiduciary model), and a step-by-step plan for implementation.

Let’s begin by defining managed retirement accounts and exploring what sets them apart from traditional 401(k) investment options.

What Are Managed Retirement Accounts? Definition and Core Concepts

Managed retirement accounts are participant-level investment solutions offered within a defined contribution plan that combine professional money management with personalized, goal-based strategies. Unlike a traditional 401(k) lineup—where participants select from a menu of mutual funds or broadly constructed target date funds—managed accounts gather individual data (age, salary, retirement horizon, risk tolerance) to build a custom portfolio tailored to each participant’s objectives.

These accounts typically include:

Personalized portfolios designed around a participant’s unique financial profile rather than a one-size-fits-all fund allocation.
Automatic rebalancing that keeps asset mixes in line with target allocations as markets shift.
Goal-based glidepaths that adjust risk exposures over time, helping savers stay on track for retirement.

By outsourcing day-to-day investment decisions to a dedicated manager, plan sponsors deliver tailored guidance at scale—minimizing participant guesswork and helping people remain invested appropriately throughout their careers.

Distinguishing Managed Accounts from Target Date Funds and Other QDIAs

Qualified Default Investment Alternatives (QDIAs) come in three flavors:

Life-cycle/target date funds, which shift risk over time but apply a uniform strategy to broad cohorts (e.g., “2050 Fund”).
Balanced funds, which maintain a fixed stock/bond mix regardless of a participant’s age or goals.
Managed accounts, which craft a bespoke allocation for each individual based on personal data and retirement targets.

For more detail on QDIA rules and how managed accounts fit within the safe harbor, see the ERISA Advisory Council’s report on target date funds and hard-to-value assets: ERISA Advisory Council report.

Role of the Third-Party Fiduciary and Investment Manager

Under ERISA, plan sponsors carry ultimate responsibility for selecting and monitoring investments. However, they can delegate certain duties to specialist fiduciaries:

A 3(16) administrative fiduciary manages day-to-day plan operations, compliance tasks, and participant communications.
A 3(38) investment manager assumes discretionary authority for choosing, overseeing, and rebalancing the plan’s investment lineup.

Engaging a 3(38) provider for managed accounts shifts routine investment oversight from the sponsor to an expert. When properly documented, this delegation can reduce the sponsor’s ERISA liability by placing continuous monitoring and decision-making in the hands of a dedicated professional.

Key Terminology for Plan Sponsors

Navigating managed account programs means getting comfortable with a few critical terms:

QDIA: Qualified Default Investment Alternative, a safe harbor for default investments.
3(16) fiduciary: ERISA role handling administrative duties, records, and disclosures.
3(38) fiduciary: ERISA role with discretionary investment authority.
Discretionary advice: Advice where the manager makes investment decisions on a participant’s behalf.
Non-discretionary advice: Guidance offered to participants who retain final decision-making authority.

Action item: cross-reference these terms against your SPD, adoption agreement, and service agreements to confirm that roles, responsibilities, and required disclosures are clearly defined.

How Managed Retirement Accounts Operate Within a 401(k) Plan

Managed retirement accounts weave together participant data, automated workflows, and professional oversight to deliver tailored portfolios at scale. Whether a participant opts in or is automatically enrolled as the QDIA, the process follows three core phases: data capture, investment implementation, and ongoing maintenance. Here’s how it all connects under the hood of your 401(k).

Personalization and Data Integration Mechanisms

At the heart of any managed account program lies a steady stream of participant and plan data flowing from your recordkeeper to the investment manager. Typical data feeds include:

Demographics: age, hire date, retirement target age
Compensation: salary, contribution rates, employer match
Account balances and transaction history

Most providers rely on passive integration—secure, nightly file transfers that update a participant’s risk profile and account status without manual intervention. Despite common myths, truly personalized portfolios aren’t built on data alone. As Morningstar notes in its myth-busting guide, “debunking myths managed accounts” participants often complete a brief questionnaire covering retirement goals, time horizons, and comfort with market swings. That extra layer of insight lets the manager calibrate allocations to each saver’s unique needs.

Professional Management and Ongoing Adjustments

Once the necessary inputs are in place, the investment manager constructs an initial asset allocation—say, a blend of equities, fixed income, and alternatives—that aligns with a participant’s profile. From there, the system handles:

Periodic rebalancing: When market movements push a portfolio beyond preset drift thresholds (often ±5%), the manager sells overweight assets and buys underweight positions to restore the target mix.
Glidepath shifts: As a participant ages, allocations gradually shift toward lower-risk assets: a 45-year-old might start at 60% equities/40% bonds, then move to a 55/45 split at age 50, and 50/50 by 55.
Goal-attainment monitoring: Quarterly or annual performance reviews compare projected retirement income against targets, triggering recommendations—like small increases to contribution rates—to keep participants on track.

By automating these adjustments, sponsors ensure that each portfolio evolves in step with both markets and individual circumstances, without adding administrative burden.

Fee Structures and Pricing Models

Managed accounts typically charge one of two fee models:

Asset-based fees: A percentage of assets under management (e.g., 0.50%–0.75% annually), often with breakpoints that reduce the rate as balances grow.
Subscription models: A flat per-participant fee—monthly or quarterly—that covers advice and management services regardless of account size.

According to NEPC’s survey on managed accounts, plan sponsors are beginning to explore tiered subscription pricing that offers a base digital-only service with an added fee for human advisor access. When negotiating terms, consider:

Performance-based caps: Tie fees to hitting specified risk-adjusted return or goal-attainment benchmarks.
Volume discounts: Seek lower asset-based rates once the managed program reaches thresholds (e.g., $50 million in AUM).
Service-level tiers: Carve out basic autopilot rebalancing versus full advisory support, so you only pay for what participants actually use.

By understanding these models and negotiating metrics that align to your plan’s size and demographics, you can strike the right balance between cost and service quality—keeping fees transparent and predictable for both your organization and plan participants.

Regulatory and Fiduciary Considerations Under ERISA

Offering a managed retirement account solution isn’t just about picking the right provider—it also triggers a host of ERISA fiduciary duties and regulatory requirements. As a plan sponsor, you remain responsible for selecting, monitoring, and documenting that process, even when you delegate discrete tasks to 3(16) or 3(38) fiduciaries. Understanding the QDIA safe harbor rules, knowing how to keep thorough records, and adopting sensible benchmarking practices are essential to minimize liability and maintain compliance.

ERISA Requirements for Managed Account QDIAs

Under ERISA’s QDIA safe harbor (404(c) regulations), managed accounts can serve as a default investment option provided you meet certain conditions:

Participant Disclosures: Deliver a written notice at least 30 days (but no more than 90 days) before the plan year in which the QDIA applies, plus an annual notice thereafter. This notice must describe:
- The general features and objectives of the managed account program
- The fees and expenses
- The identity of the fiduciary(ies) responsible for investment selection and monitoring
Rebalancing Requirements: Ensure each participant’s managed portfolio is rebalanced at least quarterly—or more frequently if market movements exceed preset drift thresholds.
Transfer Rights: Allow participants to move assets out of the managed account at least once every calendar quarter without restrictions or surrender charges.

Action item: Review your plan’s SPD, adoption agreement, and Investment Policy Statement. Make sure each document clearly:

Names your managed account as a designated QDIA
Describes the notice timing, content, and delivery methods
Outlines rebalancing protocols and participant transfer rights

Ongoing Monitoring and Documentation

Selecting the right managed account provider is just step one. To satisfy ERISA’s “prudent process” standard, maintain a governance framework that covers:

Request for Proposal (RFP) and Vendor Selection
- Develop RFP criteria (fees, technology, fiduciary roles, service levels)
- Document scoring methodology and final selection rationale
Annual Performance and Compliance Review
- Compare actual outcomes to agreed benchmarks and fee schedules
- Audit adherence to rebalancing and notice requirements
Recordkeeping and Committee Oversight
- Keep meeting minutes that record discussions, decisions, and remedial actions
- Use a vendor scorecard and monitoring log to track key metrics (e.g., drift thresholds, service-level breaches)

Recommended templates include a standardized monitoring log—with columns for review dates, metrics, and follow-up actions—and a vendor scorecard that weights criteria like performance, service quality, and participant feedback.

Benchmarking Personalized Strategies: Challenges and Solutions

Managed accounts present a unique benchmarking challenge: each portfolio is bespoke, making it impossible to compare all participants to a single market index. Instead, consider:

Risk-Adjusted Returns: Use metrics such as the Sharpe ratio or Information ratio to evaluate performance relative to the risk taken.
Goal-Attainment Rate: Measure the percentage of participants projected to meet or exceed their retirement income goals over a rolling period.
Custom Peer Comparisons: Create peer groups based on similar risk profiles or cohort demographics rather than plan-wide averages.

For more guidance on measuring managed account performance, see the Retirement Learning Center’s resource on managed accounts: Retirement Learning Center guidance.

By aligning your monitoring process with ERISA’s fiduciary standards—and adopting customized benchmarking methods tailored to personalized strategies—you’ll maintain regulatory compliance while demonstrating prudent oversight of your managed retirement account program.

Benefits of Managed Retirement Accounts for Participants and Sponsors

Managed accounts deliver proven advantages for both participants and plan sponsors. By blending professional oversight with automated processes, these solutions improve retirement outcomes, reduce fiduciary exposure, and streamline plan operations. Below, we explore the primary benefits and back them up with industry research.

Enhanced Participant Outcomes and Engagement

Participants in managed retirement accounts often see superior results compared to peers in target date funds (TDFs). According to an Alight study, savers with managed accounts enjoyed:

0.27% higher net annual returns, compounded over multiple years
74% retention rate versus TDF users, driven by ongoing engagement
Increased contribution rates as participants gain confidence in their personalized strategy

These metrics suggest that tailored portfolios and hands-off rebalancing foster better savings habits and a stronger sense of control. When participants trust that a dedicated manager is regularly monitoring their progress, they’re more likely to stay enrolled and adjust contributions to stay on track for retirement.

Reduced Fiduciary Liability and Compliance Support

Outsourcing investment decisions to a 3(38) fiduciary shifts key responsibilities from the plan sponsor to an independent expert. This delegation offers:

Discretionary authority for portfolio construction, monitoring, and rebalancing
Continuous due diligence and regulatory oversight handled by the provider
Clear assignment of fiduciary roles, reducing ERISA liability for sponsors

By engaging a 3(38) manager, sponsors can document a prudent selection and monitoring process. The provider’s ongoing research, paired with vendor scorecards and service-level agreements, helps satisfy ERISA’s “prudent person” standard and mitigates the risk of litigation or regulatory inquiries.

Administrative Efficiencies and Plan Design Flexibility

Managed accounts automate many labor-intensive tasks, lightening the load for HR and finance teams:

Nightly data feeds replace manual file uploads, keeping participant information up to date
Automated rebalancing and glidepath shifts eliminate ad hoc trades and error-prone spreadsheets
Streamlined government form preparation—from Form 5500 disclosures to participant notices—reduces administrative overhead

These programs also offer design flexibility: they can function as a default QDIA for automatic enrollees or as an opt-in advisory service for engaged participants. Either way, managed accounts adapt to your workforce without adding complexity, allowing you to deliver sophisticated guidance at scale.

Adoption Trends and Participant Engagement in Managed Accounts

Despite their rapid growth—nearly 22% in the last year—managed retirement accounts are still finding their footing across the 401(k) landscape. Uptake by plan sponsors remains modest, and participant enrollment often trails behind. Understanding who’s offering these services, where they struggle, and how to spark engagement can help you craft a program that delivers real value.

Early adopters tend to be larger organizations with dedicated retirement committees and deeper pockets. Smaller plans may balk at perceived complexity or fixed-cost hurdles. On the participant side, even when managed accounts are available, enrollment rates can stall below 10%, often due to cost concerns or uncertainty about what they’re signing up for. In the sections that follow, we’ll unpack the data, spotlight insights for small-plan sponsors, and share communication tactics proven to boost participation.

Industry Adoption Rates Among Plan Sponsors

According to a recent SHRM report, only 4% to 15% of all plan sponsors currently offer managed account programs.

Mid-to-large employers (over $50M in AUM) lead the way, citing better negotiation leverage on fees and stronger participant demand.
Smaller plans often view managed accounts as “nice to have” rather than essential, given tighter budgets and limited staff bandwidth.
Providers report growing interest in hybrid models—digital advice as a default QDIA, paired with an opt-in human advisor tier—to balance cost and scale.

As more fiduciaries recognize the liability-mitigation benefits of outsourcing investment oversight, adoption is expected to climb. But for now, managed accounts remain a specialty offering rather than a mainstream default.

Adoption and Engagement in Small 401(k) Plans

Small plans—those under $10M in assets—face unique challenges:

Economies of scale are harder to achieve, making asset-based fees feel relatively steeper.
Many recordkeepers don’t bundle managed accounts into their base platforms for sub-$5M plans, pushing sponsors to purchase stand-alone solutions.
Committee bandwidth is limited, so launching and monitoring a new service can strain existing workloads.

However, PFB&T data shows that roughly half of all 401(k) plans have access to managed account programs, even if take-rates remain low. Small-plan sponsors can bridge the gap by:

Negotiating subscription-style fees that better align with participant counts rather than assets.
Partnering with a trusted TPA (like Summit Consulting Group) to coordinate integration and compliance tasks.
Leveraging pooled-asset approaches—grouping similar participant cohorts to unlock volume discounts and reduce per-head costs.

Overcoming Low Participant Engagement

Even when managed accounts are on the menu, enrollment often stalls around 5–10%. Common barriers include fee sensitivity, unfamiliar jargon, and uncertainty about the benefits. To counteract these trends, try:

Targeted Mailers: Segment participants by tenure or balance and send concise, benefit-focused postcards or emails. Illustrate the value—“Your retirement on autopilot for just $1 a day”—to frame fees in relatable terms.
Interactive Digital Tools: Embed a short online quiz or retirement calculator on your plan website. When participants see a personalized projection, they’re more likely to opt in.
Webinars and Lunch-and-Learn Sessions: Host brief, live Q&A sessions with your 3(38) manager. Real-time dialogue helps demystify the service and build trust.
Peer Testimonials: Share anonymous success stories—“John from Accounting boosted his projected income by 15%”—to spotlight tangible outcomes.

By tailoring your communications and lowering the activation threshold, you’ll turn a passive benefit into an engaged, value-adding solution—driving both participation and satisfaction in your managed retirement account program.

Potential Drawbacks and Mitigation Strategies

While managed retirement accounts deliver many benefits, sponsors should be candid about the potential downsides—and plan ahead to minimize their impact. The following three areas often give pause, but with the right approach, each can be addressed effectively.

Fee Sensitivity and Cost Transparency

High fees can substantially erode net returns over time, especially in smaller accounts where a 0.50%–0.75% asset-based fee feels steep. Left unchecked, participants may view managed accounts as an expensive add-on rather than a value-add, leading to low enrollment.

To turn cost objections into buy-in:

Negotiate tiered pricing that reflects both plan size and participant balances. For example, seek breakpoints at $25 million and $50 million in assets to drive down the marginal fee rate.
Explore subscription models—flat per-participant fees—that shift the focus from account size to membership counts. This can make the service more predictable and attractive to lower-balance participants.
Request performance-based fee caps tied to predefined benchmarks (e.g., achieving a Sharpe ratio above a target). If the manager fails to meet agreed risk-adjusted returns, the excess fee rebates back to the plan.

Transparent, tiered structures and alignment of fees to outcomes ensure participants see clear value and feel confident that costs won’t spiral as markets rise.

Data Privacy and Participant Consent

Managed accounts rely on detailed personal and financial information: ages, salaries, contribution rates, risk profiles, even external assets. That data is mission-critical, but it also creates points of vulnerability. A breach—or lack of clear consent—can expose plan sponsors to regulatory scrutiny and participant mistrust.

Mitigation strategies include:

Conducting vendor due diligence that extends beyond investment performance to security controls, including SOC 2 Type II or ISO 27001 certifications.
Requiring a signed data-sharing agreement that spells out how participant information is stored, encrypted, and purged when no longer needed.
Including clear consent language in your enrollment materials and SPD, so participants understand exactly which data points will be used and how they will be protected.

By treating data governance with the same rigor as investment selection, sponsors demonstrate care for participant privacy and safeguard against unexpected exposures.

Aligning Service Levels with Participant Demographics

Not every participant demands—or is willing to pay for—full advisor-assisted service. A young saver with a simple profile may be perfectly satisfied with automated rebalancing, while a near-retiree might value concierge access to a financial professional. Packaging one uniform service risks mismatches that drive up costs or undermine perceived value.

Sponsors can address this by offering tiered service options:

Digital-only tier: Basic model-driven portfolios and automated rebalancing at a nominal fee, ideal for tech-savvy, lower-balance participants.
Hybrid tier: Access to online advice tools plus periodic check-ins with a CFP® professional for a moderate additional fee.
Full-service tier: Unlimited, real-time advisor support and holistic planning, priced for higher-balance accounts or those nearing retirement.

This “a la carte” approach lets participants self-select the level of guidance they need, boosting satisfaction while keeping costs appropriate to each cohort’s expectations.

By anticipating these common concerns—and layering in clear, actionable solutions—plan sponsors can smooth the path to successful managed account adoption, ensuring the program delivers its full promise for both participants and the organization.

Types of Managed Account Solutions and Delivery Models

Not every managed account offering is built the same. Sponsors should understand how various delivery models integrate with existing plan infrastructure, the level of advisor involvement, and the enrollment mechanics. Below, we break down three key dimensions: where the account lives, who drives the strategy, and how participants access the service.

In-Plan Managed Accounts vs. Brokerage-Style Wrap Accounts

In-plan managed accounts are housed directly within your 401(k) or other defined contribution platform. Recordkeepers handle all transactions, participant statements, and compliance checks as part of the core plan service. In contrast, brokerage-style wrap accounts sit outside the plan’s trust structure—typically in a separate brokerage window—where an adviser or platform executes trades under a single wrap fee.

Pros and cons at a glance:

• In-Plan Managed Accounts
– Seamless integration with payroll, contributions, and loan/withdrawal processes
– Single statement for all plan assets—simplifies compliance and participant reporting
– Fees may be lower due to bundled recordkeeper relationships

• Brokerage-Style Wrap Accounts
– Wider investment universe, including individual securities and alternative vehicles
– Flexibility to aggregate assets from multiple plans or outside IRAs
– Separate reporting can complicate Form 5500 preparation and participant disclosures

Choosing between them often comes down to your plan’s appetite for complexity versus flexibility. Smaller plans may favor an in-plan solution for ease of administration, while larger sponsors with sophisticated investors might value a wrap account’s broader menu.

Advisory-Driven vs. Algorithmic Managed Accounts

Another key distinction lies in how investment decisions get made. Advisory-driven models pair participants with a human advisor or team—often a CFP® professional—who reviews and adjusts portfolios. Algorithmic (or “robo-advisor”) solutions rely on rules-based engines to construct and rebalance portfolios automatically, with the occasional escalation to a live adviser for complex cases.

– Advisory-Driven
• High-touch service, including personalized check-ins and holistic financial planning
• Appeals to near-retirees or savers with complex outside assets
• Fee premium typically reflects ongoing advisor availability

– Algorithmic
• Cost-efficient: lower asset-based or flat subscription fees
• Speed and consistency through automated rebalancing and goal-tracking
• Best suited for participants comfortable with digital tools and standardized strategies

John Hancock’s near-retirement managed account example demonstrates how a hybrid model can serve both audiences: an algorithmic glidepath handles day-to-day shifts, while advisors step in as participants approach retirement to fine-tune income strategies.

Managed Accounts as QDIA vs. Opt-In Service

Sponsors can position managed accounts in two primary ways:

QDIA (Default Investment)
– Automatically enrolled participants default into the managed account program.
– Requires QDIA notices 30–90 days before the plan year and quarterly transfer rights.
– Excellent for driving scale and ensuring even disengaged savers receive professional management.
Opt-In Service
– Participants must actively elect to join the managed account offering.
– Enrollment materials and interactive tools are crucial to illustrate value.
– Better suited when concerns about fee sensitivity or participant choice are paramount.

Designating a managed account as the QDIA simplifies enrollment—everyone is in unless they choose otherwise—but it does require strict adherence to ERISA’s safe harbor notices and transfer protocols. An opt-in model demands more robust education and marketing but gives participants full control over their investment experience.

By weighing these solution types against your plan’s size, participant demographics, and administrative bandwidth, you can select a managed account delivery model that aligns with both sponsor priorities and saver needs.

Comparing Major Managed Account Providers

With so many managed retirement account solutions on the market, plan sponsors need a clear way to differentiate offerings. Below is an overview of leading providers—highlighting their unique value propositions, target audiences, fee models, and integration features.

Fidelity’s Managed Retirement Funds

Fidelity’s Managed Retirement Funds deliver a suite of six risk-based collective investment funds designed for seamless QDIA integration. Key features include:

Risk-Profile Series: Funds range from conservative to aggressive, aligning automatically to participant risk tolerance.
Automatic Rebalancing: Monthly rebalancing keeps allocations on target without participant intervention.
Simplified Menu: A single-fund solution per risk level reduces participant choice overload.
Asset-Based Fees: Tiered expense ratios that decline as assets scale.

Morgan Stanley’s 401(k) Managed Accounts

Morgan Stanley’s 401(k) Managed Accounts emphasize personalized strategies backed by proprietary research. Designed for plan sponsors seeking robust participant outcomes, this solution offers:

Custom Portfolios: Portfolios are tailored to each saver’s age, risk tolerance, and retirement goals.
Professional Oversight: Dedicated investment teams perform ongoing monitoring and adjustments.
Engagement Metrics: Participants in managed accounts demonstrate higher savings rates and confidence.
Performance-Linked Reporting: Quarterly reviews compare actual returns against peer benchmarks.

Schwab’s Managed Account & Advice Services

Schwab’s Managed Account & Advice Services couples digital tools with access to independent registered investment advisers. Its modular design lets sponsors mix and match features:

QDIA or Opt-In: Use as a default investment with dynamic resets or offer as an elective service.
Fee Flexibility: Asset-based pricing or flat subscription models, with optional advisor tiers.
Education & Engagement: Built-in participant communications, webinars, and interactive calculators.
ERISA 3(38) Fiduciary Support: Morningstar Investment Management serves as discretionary manager.

The Standard’s Managed Retirement Accounts

The Standard’s Managed Retirement Accounts feature a series of collective funds designed to span six risk levels. Highlights include:

Collective Investment Trust Structure: Cost-efficient fund vehicles with lower administrative fees.
Glidepath Framework: Predefined risk shifts that automatically de-risk portfolios over time.
Integration Ease: Available through major recordkeepers as a plug-and-play solution.
Transparent Pricing: Simple expense ratios, with no hidden wrap fees.

Principal’s Managed Account Solutions

Principal’s Managed Account Solutions deliver both algorithmic portfolios and access to CFP® professionals. Core attributes:

Hybrid Advice Model: Automated glidepaths supplemented by human advisor check-ins.
Flexible Asset Allocation: Retirement, income, and custom model portfolios to address varied goals.
Opt-In Enrollment: Participants elect service via online portal with guided onboarding.
Subscription or AUM Fees: Choice between flat per-participant fees or asset-based pricing.

John Hancock’s Near-Retirement Managed Accounts

John Hancock’s Near-Retirement Managed Accounts focus on savers approaching retirement, offering:

Tailored Glidepaths: Dynamic shifts based on proximity to retirement and income needs.
Income-Planning Tools: Scenario modeling for Social Security, annuities, and withdrawal strategies.
Multi-Channel Support: Online calculators, webinars, and direct advisor access.
ERISA-Compliant Advice: Clear disclosures and default transfer rights as a QDIA.

Broadridge’s Managed Retirement Funds

Broadridge’s Managed Retirement Funds are a series of six collective investment trust funds that:

Cater to Risk Profiles: From conservative income-focused to growth-oriented strategies.
Automate Rebalancing: Quarterly or drift-triggered rebalancing restores target allocations.
Leverage Scale: Designed for mid- to large-size plans seeking cost efficiencies.
Simplified Administration: Full integration with existing plan recordkeeping systems.

Summit Consulting Group’s Fiduciary-Driven Managed Account Service

Summit Consulting Group’s Fiduciary-Driven Managed Account Service blends independent 3(16) and 3(38) fiduciary oversight with flexible plan design:

Independent Fiduciary Model: Sponsors can delegate both administrative (3(16)) and investment (3(38)) responsibilities.
Cost Reduction Focus: Strategies aimed at cutting overall plan expenses by 32%–65%.
Provider Agnostic: Integrates seamlessly with existing custodians and recordkeepers.
Automation & Compliance: Data feeds, auto-generated notices, and government form support.

Comparison Table Suggestion:
To streamline provider selection, consider a table with columns for:

Fee Structure (AUM vs. subscription)
QDIA Availability (default vs. opt-in)
Advisor Access (algorithmic vs. high-touch)
Integration Ease (in-plan vs. wrap account)
Minimum Account Size
Fiduciary Roles (3(16), 3(38))
Target Participant Cohort (early-career vs. near-retirement)

This side-by-side view helps sponsors match service levels, cost models, and fiduciary coverage to their plan’s size, budget, and participant demographics.

Implementing a Managed Account Program: Best Practices

Rolling out a managed retirement account program requires a structured, collaborative approach—from selecting the right partner to ensuring participants embrace the new service. These best practices will help your committee navigate key decisions, streamline system integrations, and craft communications that drive enrollment and engagement.

Selecting the Right Provider and Negotiating Terms

Begin with a clear RFP process that outlines your plan’s goals, participant demographics, and desired service levels. At a minimum, your RFP should address:

Fee structure and breakpoints: asset-based rates, subscription options, volume discounts, and performance-based caps
Fiduciary roles: confirmation of 3(16) and/or 3(38) appointments and supporting documentation
Technology platform: data-feed frequency, file formats (CSV, XML), recordkeeper integration, participant portal features
Service model: advisory tiers (digital-only, hybrid, full-service), minimum account sizes, transition support
Reporting and governance: frequency of performance and compliance reports, access to vendor scorecards, audit trails

Sample RFP questions:

“How do you price managed accounts for plans under $25M versus those over $50M in AUM?”
“Can you provide SOC 2 Type II or ISO 27001 documentation to verify data security controls?”
“What is your standard turnaround time for data-feed integration and testing?”
“Describe your process for handling participant-level inquiries and escalations.”
“Which ERISA fiduciary roles do you accept, and how is that documented in service agreements?”

When evaluating proposals, weight each criterion according to plan objectives—fees and fiduciary coverage might account for 30% of the score, technology integration 30%, service levels 20%, and implementation support 20%. Document your scoring methodology and final rationale for audit purposes.

Integrating with Your Recordkeeper and Custodian

Smooth technical integration ensures participant data and plan transactions flow seamlessly between systems. Follow these steps:

Define specifications: map required data fields (participant ID, contribution rate, salary, balances) and agree on file formats and transfer schedules (e.g., nightly SFTP).
Conduct parallel testing: run test feeds for two payroll cycles to validate accuracy, field mappings, and exception handling.
Establish reconciliation procedures: align trade dates, contribution postings, and fee billing with custodian statements to catch discrepancies early.
Document the workflow: a visual diagram showing data sources, transformation steps, and destination fields helps all parties understand the end-to-end process.
Lock in SLAs: specify response times for data failures, downtime notifications, and corrective actions in your service-level agreement.

Schedule regular touchpoints with your recordkeeper and custodian teams. Early alignment on data governance and reconciliation rules prevents surprises at go-live and minimizes late-night troubleshooting.

Communicating and Educating Plan Participants

A robust communication plan can turn managed accounts from an abstract benefit into a trusted service. Consider this three-phase approach:

Phase 1: Pre-Launch Awareness (4–6 weeks before go-live)

Send high-level emails or mailers introducing the concept—“Your retirement on autopilot starts soon.”
Publish FAQs on your intranet or benefits portal outlining key dates and program highlights.

Phase 2: Launch and Enrollment (Launch week)

Host 30-minute webinars with your 3(38) manager to walk through enrollment and answer live questions.
Distribute step-by-step guides—digital and printed—on how to opt in (or how default enrollment works for QDIA participants).
Offer a brief online calculator so participants can compare projected outcomes with and without managed accounts.

Phase 3: Ongoing Engagement (Quarterly)

Issue performance summaries comparing goal-attainment progress against targets.
Schedule “office hours” or lunch-and-learn sessions for small-group Q&A.
Send targeted reminders to non-enrolled participants, highlighting peer success stories (“John from Accounting boosted his projected income by 15%”).

Use a mix of channels—email, intranet announcements, workshops, and direct mail—to reach participants where they are. Frame messages around outcomes (confidence, time savings, potential return improvements) rather than features or fees to boost understanding and enrollment.

Future Trends Shaping Managed Retirement Accounts

As managed retirement accounts continue to mature, plan sponsors and providers are looking ahead to the innovations that will drive the next wave of participant outcomes, cost efficiencies, and engagement. From smarter algorithms to new pricing structures and deeper ties to overall financial wellbeing, these emerging trends promise to reshape how retirement‐saving strategies are delivered and consumed. Below, we examine four key areas that sponsors should watch—and prepare for—as they refine their managed account offerings.

AI-Driven Personalization and Predictive Analytics

Machine learning and artificial intelligence (AI) are poised to transform managed account programs by enabling truly dynamic, real-time portfolio adjustments. Instead of relying solely on pre-defined glidepaths, next-generation platforms will ingest vast data sets—economic indicators, market sentiment, even participant behavior patterns—to anticipate shifts in risk tolerance and cash-flow needs. Imagine a system that senses a downturn in a participant’s outside income sources and subtly de-risks their portfolio days before a broad market sell-off.

Actionable questions to ask potential providers:

“How do you leverage AI or predictive models to adjust allocations beyond age-based glidepaths?”
“Which alternative data sources (e.g., spending trends, macroeconomic signals) feed into your optimization engine?”
“Can you share examples where predictive analytics improved goal-attainment rates or reduced downside risk?”

By challenging vendors on their AI road map and transparency around model inputs, sponsors can ensure they’re partnering with firms that truly harness predictive analytics for participant benefit.

Subscription-Based Fee Models and Tiered Services

Traditional asset-based fees aren’t the only game in town. According to NEPC’s survey on the state of managed accounts, a growing number of sponsors are exploring flat-fee, per-participant subscription models to enhance cost transparency and drive adoption. Under this approach, participants pay a predictable monthly or quarterly fee—say, $20 per quarter—instead of a percentage of assets, making the service more approachable for lower-balance savers.

Coupled with subscription pricing, tiered service levels let participants choose the experience that matches their needs and budgets:

Basic digital tier: algorithmic portfolio construction and automated rebalancing for a low flat fee.
Premium tier: includes periodic check-ins with a CFP® professional, income planning tools, and holistic advice.

By blending subscription structures with service tiers, sponsors can lower the barrier to entry and align costs directly with the value each participant receives.

Integration with Financial Wellbeing Programs

Retirement planning no longer lives in a silo. Forward-thinking sponsors are weaving managed accounts into broader financial wellbeing ecosystems—linking budgeting apps, debt-management tools, student-loan guidance, and even mental health resources. This holistic approach recognizes that a participant’s ability to save for retirement often depends on their immediate financial stressors and behaviors.

For a deeper exploration of how managed accounts can mesh with overall wellbeing initiatives, see the RetirementAdvisor viewpoint. Embedding retirement advice alongside everyday financial tools not only boosts engagement but also helps participants view their 401(k) as part of a unified financial journey.

Industry Growth and Expansion Trends

While managed account penetration remains modest today, growth forecasts are bullish. Lord Abbett’s analysis highlights accelerating adoption in defined contribution plans post-2020, driven by increased sponsor comfort with outsourced fiduciary models and participant demand for personalized solutions. As recordkeepers package managed accounts into core platforms and pricing continues to become more competitive, we can expect the roll-out curve to steepen significantly over the next few years.

Sponsors should monitor evolving benchmarks—such as run-rate growth in program take-rates and shifts in average participant balances within managed accounts—to gauge when it makes sense to expand or re-tune their offerings. Aligning your managed account roadmap with these industry trends will ensure your plan keeps pace with peer programs and rising participant expectations.

Next Steps for Plan Sponsors

Now that you’ve explored how managed retirement accounts can elevate participant outcomes, streamline administration, and mitigate fiduciary risk, it’s time to turn insight into action. Here’s a quick roadmap to help your committee move forward:

Revisit your plan design. Review your current QDIA lineup and consider whether a managed account solution should replace or sit alongside existing target date funds.
Engage key stakeholders. Bring your retirement committee, third-party administrator, recordkeeper, and legal counsel together to map out roles, responsibilities, and timelines.
Develop or update your RFP. Incorporate the criteria we’ve discussed—fee structures, fiduciary appointments (3(16)/3(38)), technology integrations, and service tiers—and score prospective providers.
Pilot your data feeds. Work with your recordkeeper to test nightly file transfers, data reconciliation, and reporting templates before launch.
Craft a communication plan. Outline pre-launch awareness, enrollment support, and ongoing engagement tactics—leveraging emails, webinars, calculators, and peer success stories.
Establish governance checkpoints. Schedule quarterly or annual reviews to benchmark goal-attainment rates, rebalancing adherence, and participant feedback.

By following these steps, you’ll position your organization to deliver personalized investment guidance at scale—helping every employee stay on track for retirement. Ready to explore a fiduciary-driven managed account program tailored to your plan’s needs? Visit Summit Consulting Group’s independent fiduciary services to learn how we can partner with you.