Managed Accounts

All 401(k) Plan recordkeeping firms are experiencing margin compression in their core business and seeking ways to increase their revenue in other areas, such as selling Managed Accounts.

It is critical that Plan Sponsors realize Managed Accounts are NOT a service but an investment product. Why the distinction? A Managed Account as an investment product means you have a fiduciary duty to conduct due diligence to evaluate the benefits.

  • Do I have written documentation on our decision to add a Managed Account option to the plan?
  • Did the Committee review the investment process undertaken by the Managed Account provider?
  • What are the fees for the Managed Account option?
  • Is the recordkeeper’s advisory arm providing the Managed Account option and does this pose any conflicts?
  • If there is a third-party advisor providing the Managed Account option Is the recordkeeper receiving compensation?

As with any fiduciary decision, it is important for Plan Sponsors to utilize a formal due diligence process in analyzing the Managed Account option.

If your Committee has been proactively offered adding the Managed account to your Plan. Buyer beware!   Make sure you have asked the questions above or contact Comperio to help in your evaluation. This is not a service, but a fiduciary decision and the risks lie with you the Plan Sponsor if you add this service blindly.