PLANADVISER - July/August 2017 - 44
investment-oriented
Default Thinking
How to advise sponsors about switching to managed accounts as the QDIA
" I
f target-date funds [TDFs] are the
first iteration of the QDIA [qualified
default investment alternative],
I see managed accounts emerging
as QDIA version 2.0, " says Andrew
Harbour, head of the Atlanta office
of Graystone Consulting at Morgan
Stanley.
But Harbour's practice currently
has no clients using managed accounts
as their plan's default investment.
" Everybody is asking about [them], but
nobody wants to be the first to take
the plunge, " he says. " Plan sponsors
are wondering, 'What is this managed
account
solution that everybody is
talking about, and why would we use it
as the QDIA?' "
Harbour explains it this way: Think
of two 45-year-old employees who
have been automatically enrolled into
the same target-date fund. " In reality,
those 45-year-olds may be in totally
different phases of life, " he says. One
may be a high earner who has saved
steadily for retirement throughout
his career and who wants to retire
early. The other employee may make a
much lower salary, have an uncertain
retirement timeline, and may have
only recently begun saving for retirement.
" So, to make the argument that
these two people should get the same
target-date fund glide path and the
same investments does not make a lot
of sense, " he says. " Managed account
solutions can take into account factors
such as an individual participant's risk
tolerance, account balance, compensation
and current deferral rate. "
Yet, just 7% of plans utilize managed
accounts as the default investment,
compared with 34.5% using active
target-date funds and 21.6% using
indexed target-date funds, according
to the 2016 PLANSPONSOR Defined
Contribution (DC) Survey. Harbour
understands the current hesitation.
" In most cases, it's an expense 'drag'-
it's an added cost. Clearly, it is easier
44 | planadviser.com july-august 2017 Art by Lars Leetaru
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PLANADVISER - July/August 2017
Table of Contents for the Digital Edition of PLANADVISER - July/August 2017
Reconsidering the Status Quo
2017 PLANADVISER Recordkeeper Services Guide
Reviewing Providers
Bringing It All Together
Default Thinking
The Best Path Forward
PLANADVISER - July/August 2017 - C1
PLANADVISER - July/August 2017 - FC1
PLANADVISER - July/August 2017 - FC2
PLANADVISER - July/August 2017 - C2
PLANADVISER - July/August 2017 - 1
PLANADVISER - July/August 2017 - 2
PLANADVISER - July/August 2017 - 3
PLANADVISER - July/August 2017 - 4
PLANADVISER - July/August 2017 - 5
PLANADVISER - July/August 2017 - 6
PLANADVISER - July/August 2017 - 7
PLANADVISER - July/August 2017 - 8
PLANADVISER - July/August 2017 - 9
PLANADVISER - July/August 2017 - 10
PLANADVISER - July/August 2017 - 11
PLANADVISER - July/August 2017 - 12
PLANADVISER - July/August 2017 - 13
PLANADVISER - July/August 2017 - 14
PLANADVISER - July/August 2017 - 15
PLANADVISER - July/August 2017 - 16
PLANADVISER - July/August 2017 - 17
PLANADVISER - July/August 2017 - 18
PLANADVISER - July/August 2017 - 19
PLANADVISER - July/August 2017 - 20
PLANADVISER - July/August 2017 - 21
PLANADVISER - July/August 2017 - 22
PLANADVISER - July/August 2017 - 23
PLANADVISER - July/August 2017 - Reconsidering the Status Quo
PLANADVISER - July/August 2017 - 25
PLANADVISER - July/August 2017 - 26
PLANADVISER - July/August 2017 - 27
PLANADVISER - July/August 2017 - 2017 PLANADVISER Recordkeeper Services Guide
PLANADVISER - July/August 2017 - 29
PLANADVISER - July/August 2017 - 30
PLANADVISER - July/August 2017 - 31
PLANADVISER - July/August 2017 - 32
PLANADVISER - July/August 2017 - 33
PLANADVISER - July/August 2017 - 34
PLANADVISER - July/August 2017 - 35
PLANADVISER - July/August 2017 - 36
PLANADVISER - July/August 2017 - 37
PLANADVISER - July/August 2017 - Reviewing Providers
PLANADVISER - July/August 2017 - 39
PLANADVISER - July/August 2017 - 40
PLANADVISER - July/August 2017 - 41
PLANADVISER - July/August 2017 - Bringing It All Together
PLANADVISER - July/August 2017 - 43
PLANADVISER - July/August 2017 - Default Thinking
PLANADVISER - July/August 2017 - 45
PLANADVISER - July/August 2017 - 46
PLANADVISER - July/August 2017 - 47
PLANADVISER - July/August 2017 - The Best Path Forward
PLANADVISER - July/August 2017 - 49
PLANADVISER - July/August 2017 - 50
PLANADVISER - July/August 2017 - 51
PLANADVISER - July/August 2017 - 52
PLANADVISER - July/August 2017 - C3
PLANADVISER - July/August 2017 - C4
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