Model Portfolio & SMA Strategists Showcase - Flipbook - Page 40
SMAs & MODEL PORTFOLIOS
in how much adoption a managedaccount option actually achieves once
it’s added to a plan lineup.
ADOPTION HAS BECOME
MAINSTREAM, NOT NICHE
This shift has moved well past
early-adopter status. According to
Vanguard’s 2025 research on defined
contribution plans, 82% of plans with
at least 5,000 participants and 45%
of all plans now provide a managed
account service, an all-time high.
Fidelity’s data shows the number of
plans offering a workplace managed
account service rose from 17% in
2014 to 42% in 2023, and that growth
trajectory has continued since.
DO MANAGED ACCOUNTS
IMPROVE OUTCOMES?
The research here is more substantive
than the marketing claims might
suggest, though it comes with real
nuance. Certain studies report that
Managed Account
Participant Outcomes vs.
Target-Date Fund Users
Despite 2025 regulatory attention aimed
at easing alternatives into retirement
plans, only about 2.9% of plan sponsors
currently offer any option that includes
them. Legal experts remain skeptical that
guidance alone will drive fast adoption,
given the fiduciary complexity alternatives
introduce. Don’t oversell this to a plan
sponsor as imminent.
managed accounts can improve
participant outcomes meaningfully,
including a 27% higher savings rate
and 17% stronger projected retirement
income compared to target-date fund
users. Morningstar’s research similarly
found that managed accounts boost
outcomes for retirement investors,
though the magnitude of that impact
varies meaningfully across plans and
participants. Notably, Morningstar
found the benefit is largest for
participants who adopt managed
accounts earliest.
+17%
Those who began between ages
20 and 24 saw retirement wealth
increases of 9.9% for prior targetdate-fund investors and 22% for
participants who had previously been
managing their own allocations.
Projected
retirement income
That last finding is worth sitting
with. The biggest beneficiaries of a
managed account aren’t necessarily
older participants closer to retirement
with more assets at stake. They’re
younger, self-directed participants
whose DIY allocation decisions get
replaced with professional oversight
decades before retirement.
+27%
Savings rate
WATCH OUT FOR
401(k)s: Still mostly
theoretical
Improvement
Source: Morgan Stanley at Work, citing
Empower Annual Study of Retirement Plan
Participant Behaviors (2025)
40
Managed Account
Adoption in Defined
Contribution Plans
% of plans offering a managed
account service
45%
42%
17%
2014
2023
2025
Sources: Fidelity (2014/2023); Vanguard How
America Saves 2025 (2025, all-plan figure)
WHY PLAN SPONSORS ARE
MOTIVATED TO ADOPT THESE
PROGRAMS
The business case for a plan sponsor
mirrors, in a different context, the
practice-growth case made to
advisors throughout this guide.
Improved participant outcomes
strengthen a sponsor’s competitive
position for talent. Fidelity’s longrunning Plan Sponsor Attitudes study
has found, for four years running,
that plan sponsors most value an
advisor’s ability to improve participant
retirement readiness, and sponsor
satisfaction with their advisor is
strongly linked to whether participants
are perceived to be on track for
retirement.
