Managed portfolios have many advantages over target date funds for both the participant and the plan sponsor. The participant will increase their retirement success and the plan sponsor will reduce fiduciary concerns.

By using asset allocation models on a platform which allows investment managers to design models for participants, then have these participants move automatically through the models based on age (similar to how participants would automatically receive an adjusted asset allocation in a target date fund), the needs of the un-engaged are best satisfied by low cost investments (cost) and growth from professional management (compounding). Likewise, the engaged receive added benefit (contribution), allowing contribution rate to be easily calculated and presented with clarity. This process can be further enhanced through the use of an integrated retirement calculator (as the primary engagement option) which incorporates payroll data with the long term performance history of each asset allocation model. The result- contribution rate is calculated automatically; no manual entry or external statement reference required. Implementing plans in this way could have an absolutely substantial impact on the ability of participants to develop adequate retirement funds.

These managed portfolios allow the participant to see what is happening in their plan, clarity. This adds a certain comfort level. As a participant ages his allocation becomes more conservative unless they decide not to.

Please comment or call to discuss how this affects your company plan.