Displaying items by tag: managed accounts

Recent changes allow 401(k) plans to hold private market and alternative investments, opening the door for managed accounts to expand their offerings. Managed accounts, which provide professionally managed, customizable portfolios, are seeing rapid growth, with assets reaching $13.7 trillion in 2024 and net flows topping $811 billion. 

Incorporating private equity, venture capital, private credit, and real estate into these accounts requires robust technology for reporting, valuations, and liquidity management. 

Firms like InvestCloud are creating platforms that enable scalable, model-based access to private market investments, allowing advisors to integrate these assets alongside traditional ETFs and mutual funds. Such technology also supports liquidity solutions, like lending against securities, so investors can access cash without disrupting long-term strategies. 

Finsum: With regulatory adjustments, including tweaks to the Accredited Investor rules and the 401(k) shift, managed accounts are positioned to broaden access to previously hard-to-reach alternative investments.

Morningstar’s latest 2025 research shows that managed accounts can significantly improve retirement outcomes for defined contribution plan participants, especially those not on track. Among 84,875 users studied, 73% were initially projected to replace less than 70% of their salary in retirement, and 65% of those increased savings after enrolling in the managed account service. 

These participants, often self-directors without target-date funds, also saw a 33% median increase in deferral rates, with 10% raising contributions enough to maximize employer matches. The service functions similarly to a robo-advisor, offering personalized recommendations based on full financial profiles and the plan’s fund menu. 

For younger users and off-track investors, Morningstar found substantial improvements in projected retirement wealth and income—up to 43% and 26%, respectively. 

Finsum: These results reinforce the value of managed accounts in driving healthier savings behavior and more prudent portfolio construction within workplace retirement plans.

Managed accounts in defined contribution plans have long existed but suffer from low adoption, partly due to limited participant engagement. New technology now allows these accounts to personalize portfolios using more data than just age, potentially improving retirement outcomes. 

Providers are developing hybrid solutions like personalized target-date funds (PTDFs), which tailor asset allocations using existing data without requiring user input. However, experts stress that true personalization—and value—depends on incorporating outside assets and participant-provided details like retirement goals and risk tolerance. 

While artificial intelligence and subscription models may improve engagement, industry leaders see the ultimate goal as total household financial management. 

Finsum: Whether managed accounts can scale effectively and deliver on this promise remains a central question for the future of retirement planning.

Bond investors are increasingly turning to separately managed accounts (SMAs), drawn by their tailored structures and greater control over investment exposure. Unlike commingled funds, SMAs allow institutional clients to directly own a customized portfolio of private credit assets while setting specific guidelines around leverage, risk, and liquidity. 

These accounts have surged in popularity as allocators seek greater transparency, fee flexibility, and alignment with their long-term liabilities. In credit, SMAs offer large investors more say over deal selection, co-investment rights, and sector targeting, often resulting in better economics and stronger governance. 

SMAs—privately negotiated investment vehicles managed by asset managers on behalf of a single client—stand in contrast to pooled funds and are favored by pensions, insurers, and sovereign wealth funds for their bespoke features. 

Finsum: SMAs are becoming a central tool for investors seeking to fine-tune their exposure while capitalizing on an asset class’s yield and downside protection.

Cerulli Research highlights how the growing wealth of retail investors is pushing advisors to prioritize tax efficiency, with ETFs becoming an increasingly attractive structure. ETFs offer significant tax advantages, such as low turnover and minimized capital gains distributions, making them particularly appealing in today’s uncertain economic climate. 

As a result, Cerulli expects more separately managed account (SMA) assets to shift into ETFs, driven by both tax benefits and operational efficiencies. High net worth advisors are also focusing more heavily on tax planning, with the percentage offering tax guidance rising sharply in recent years. 

Despite the $2.7 trillion currently held in SMAs, advisors are steadily increasing their ETF allocations, especially at larger practices. However, barriers like the high cost of launching ETFs mean wealth management firms will need scale — and may increasingly turn to white-label providers for help — to fully capitalize on this shift.

Finsum: Separately managed accounts could definitely see a spike in popularity in the coming years given technological ease.