How a 401(k) managed account can help retirement readiness

A managed account features two key components: 

1   Professional guidance from an investment advisor to help a participant develop a      financial plan based on his or her unique circumstances 

2   A customized portfolio of investment options chosen from the plan’s lineup and           personalized to the participant’s financial plan and investment preferences. 

Although managed accounts do charge a fee, they come with important benefits that can help drive retirement readiness. Whereas many participants may choose their 401(k) plan investments and then forget about them, investments in managed accounts are professionally managed and monitored. 

Managed account portfolios are personalized to the objectives of each participant and monitored daily to ensure the participant is making progress toward achieving retirement readiness. Managed account portfolios are also rebalanced regularly to maintain an optimal mix of investments and can be reallocated across investment options based on a participant’s age or a change in his or her financial situation. Some managed accounts also feature automatic annual contribution increases to help keep savings rates on track to meet participants' retirement readiness goals.¹ 

Managed accounts consider a participant’s other retirement savings and income sources, outside a 401(k) plan, to determine the optimum contribution amount. External income sources can include Social Security, other retirement and savings accounts, and assets held by a spouse. By taking into account the participant’s overall financial picture, a managed account portfolio becomes even more individualized to the 401(k) plan participant. This holistic view means that the portfolio can better target the right 401(k) investment mix in the overall portfolio. 

Managed accounts can be a good option for 401(k) participants who want advice on how much to save for retirement and how to invest their savings. With the professional guidance of a qualified investment advisor, a managed account helps the participant develop a personal financial strategy and then regularly monitors and rebalances 401(k) investments to keep the strategy on track. 

The professional attention and personalization of a managed account can provide additional support for: 

• 401(k) participants who aren't on track for retirement 
• Preretirees who need a customized 401(k) investment plan to handle the transition from saving for retirement to withdrawing their money in retirement 
• Participants with other assets, including spousal assets, outside a 401(k) plan 

Managed accounts are also a sensible option for 401(k) participants who simply need peace of mind that their retirement savings are being professionally managed toward their personal goals. 

1 Investing involves risks, including the potential loss of principal. As such, participation in a managed account does not guarantee investment success.