Managed accounts can be a “powerful tool” for plan participants, but fees threaten their value.
That’s according to a Towers Watson paper that looks at the advantages and disadvantages of managed accounts as a qualified default investment alternative (QDIA).
While there are some very helpful aspects of managed accounts—one of the three options allowed as defaults by the Department of Labor if plan participants fail to choose investments—a Towers Watson survey found that just 3 percent of plan sponsors use them. Those that do seem pleased with the results, as borne out by a session at the Plan Sponsor Council of America meeting last fall.
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