By Nick Thornton
MassMutual and BlackRock have teamed to offer 401(k) plans
managed advisory services at what they said is a fraction of typical costs.
The Managed AllocationsSM platform is designed to give advisors a range of customized asset allocation strategies to offer plan sponsors.
Plan design relies on flexible glidepath models customized to the needs of participants.
Managed Allocations costs about one-third of the fees typically associated with managed advisory services, and is available to plans with at least $15 million in assets, the companies said.
“Advisors and plan sponsors want more control over the quality of the funds selected as part of the asset allocation models as well as the glidepaths available within these investment strategies,” Eric Wietsma, a vice president at MassMutual Retirement, said in a statement.
There’s plenty of data to support Wietsma’s point.
For example, Fidelity Investments saw a 78 percent increase in managed account sales for workplace retirement plans
And Vanguard research found the use of “professionally managed allocations,” such as those offered in target-date funds, produces healthier asset allocation strategies, discouraging participants from taking excessive positions in their own company’s stock.
BlackRock, the inventor of the first target-date fund, is the world’s largest asset manager. It will serve as fiduciary to sponsors who sign up for the Managed Allocations service, while MassMutual will be the recordkeeper.
The Managed Allocations program offers conservative, moderate and aggressive glidepath options based on employee demographics, savings rates, the existence of a defined benefit plan in accord with a self-directed option, and whether the sponsor offers ESOPs
Sponsors can select as few as six asset classes for their menu, and as many as nine.
Assets are allocated, and glidepaths rebalanced, on an annual basis. On top of BlackRock investment products, participants will also have access to the range of investment managers and options already offered by MassMutual.
Originally published on BenefitsPro.com