managed account providers

6 Questions to Ask When Evaluating Managed Account Providers


The popularity of managed accounts is bringing more providers into the managed account providers market. As little as five years ago, plan sponsors were captive to a single managed accounts provider being associated with a recordkeeper. Because this is no longer the case, plan sponsors often have a choice between managed account providers.

How you do choose the right managed account provider?

As a fiduciary, you are responsible for selecting the right managed account provider for your organization.  How do you decide? Where will you find differences between managed account providers? As with any evaluation, getting the right answer depends on asking the right questions. Here are 6 key questions we ask when getting started in a managed account provider selection:

Question #1: What’s your investment philosophy?

The underlying investment philosophy differs across managed account providers. Some are proponents of a passive management approach while others acknowledge the benefits of active management. The approach you take should align with the demographics of your plan participants. Will they do their own retirement planning research? Or are they best served by having their investments more closely managed by a seasoned investment advisor? Another thing to look at is how they are making capital market assumptions, which is always an important factor in determining basic portfolio allocations. Some providers adjust their assumptions annually and others make quarterly adjustments. 

Question #2: How much are we allowed to customize our managed accounts?

Some providers offer more limited ability for participants to customize their retirement portfolios. Others offer 20 or more ways to customize a retirement portfolio. The types of customization and resulting degree of change to a portfolio can differ significantly between providers.

Question #3: What is the glide path from the initial account opening to approaching retirement age?

Each managed account program has a “baseline” glide path (the movement from return seeking to preservation assets as a participant approaches retirement) around which participant portfolios can be customized. The shape of this glide path differs between providers.

Question #4: Can we offer company stock as part of the managed accounts package?

Company stock funds are either embraced by managed account providers or almost completely out of the scope of services. Some providers are willing to take on the fiduciary responsibility of company stock oversight (which generally results in much smaller individual positions) while others prefer not to retain any responsibility for this aspect of the defined contribution plan.

Question #5: What’s the implementation timeline?

When a participant decides to enroll in a managed account program, the existing retirement portfolio will need to transition from its current to a more optimal state. The rate of this change can differ significantly among providers. Some make the change immediately while other move more gradually, taking into account the entry positions.

Question #6: Who are the managed account advisors?

Some providers offer their own retirement planning advisors to consult with participants, while others rely on the recordkeeper’s call center for this feature.

Curcio Webb can help with provider selection

Plan sponsors should understand the range of managed account program approaches before deciding which provider to select. If you’re not sure which provider to select or even who are the leading managed account providers out there today, Curcio Webb provides unbiased provider selection guidance.  We’d love an opportunity to discuss your needs. Fill out the form below – or on the right, and we’ll give you a call back shortly.

Written by: Ray Blajda, Curcio Webb

benefits administration advisor