What is a 401(K) Participant Managed Account?

Understanding 401(k) Participant Managed Accounts

A 401(k) managed account is a personalized investment strategy that is tailored to the individual needs of the plan participant. Unlike traditional 401(k) plan investment lineups, which typically offer a limited selection of mutual funds, managed accounts consider factors such as the participant's age, risk tolerance, and retirement goals in recommending a portfolio. This level of customization is a key factor driving the usage of managed accounts. In fact, 77% of workers would be interested in a more personalized 401(k) option tailored to their unique financial situations.²

Moreover, managed accounts offer professional investment management, which can be particularly valuable for periodically assessing whether the participants are on track to meet the goals set forth in their managed accounts and adjusting as needed in volatile markets. Managed accounts have demonstrated the ability to improve participant outcomes, including a 22% higher savings rate (vs. participants without a managed account) and higher engagement overall (78% engaged among managed account vs 57% engaged among target date fund (TDF) users).

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