PLANADVISER - July/August 2019 - 41

help them figure out what their objectives are. [Investors]
end up doing better when you do that, " says Kane, managing
director of Plan Sponsor Consultants in Atlanta. " To me, this
is the next step in financial planning for retirement plan
participants: to make it personal and cost-effective. "
Participants need much more help than just on their
investment strategy, says Brian Cosmano, vice president
of strategic product initiatives at Empower Retirement in
Greenwood Village, Colorado. Target-date funds (TDFs)
have done a great job, getting participants into an appropriate
asset allocation, he says, but they fail to offer broader
help. Participants in a managed account can get personalized
advice on key topics such as how much to contribute to
ultimately reach a retirement-savings goal and how to time
retirement and filing for Social Security benefits, as well as
receive a withdrawal strategy recommendation.
The benefits for participants of a managed account's
personalized advice go beyond investments, Schwab's
client experience indicates. " We also see [users'] savings
rates go up, " Voris says. " They can see where their retirement-savings
gap is and how to close it, and participants
can start to develop an action plan for their retirement.
Advice works. "
Kane says Plan Sponsor Consultants has thought about
offering a managed account service. " There's been a push in
the industry to have advisers have more input on managed
accounts, " he says. " We've been waiting for this to evolve to
the point where a provider's managed account service has
the elements we think make a successful opportunity. "
What elements would make offering the service worthwhile?
" As an RIA, you need to be prepared to assist in both
participants' accumulation and decumulation investment
portfolios, " Kane says. " The managed account pricing has
to be competitive, and you have to add in some in-person
direction by the adviser as financial coach. If you incorporate
all that stuff into it-asset allocations based on models
tested by the RIA, reasonable costs for participants, and the
personal coaching-then we're onto something. But if you
start taking elements away from that, then there's not as
much of a value proposition. "
How It Works
In 2015, Schwab became the first provider to offer an adviser
managed account service to help advisers build customized
portfolios for retirement plans, Voris says, adding that
" several " plan advisers use the system today. The fact that
the setup works exclusively with Schwab and not with other
recordkeepers is a challenge for advisers, he says. " Advisers
might have 10 or 12 recordkeepers they work with. To build
this very customized relationship with Schwab-that
doesn't work for a lot of advisers. "
This realization helped motivate Schwab to sign on to
incorporate the new Morningstar service in its recordkeeping
platform. " The idea is that this can work with six or eight or 10
planadviser.com July-August 2019 | 41
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