PLANADVISER - November/December 2018 - 5

One Portfolio at a Time:
Adaptive Managed Accounts Seek
Optimal Retirement Incomes
Interview with Terry Burns
RETIREMENT readiness of DC plan participants is making a great
leap forward, through the evolution of adaptive investment technologies
and managed accounts. Drawing on a rich set of personal
information, these tools support advisers by enabling customized
asset allocation based on the circumstances of each participant.
One implementation is the Personalized Retirement Account
by OneAmerica ®, in
offered
retirement
a
outcomes,
collaboration with Russell
Investments. To learn how these new technologies develop
customized
PLANADVISER
recently
spoke to Terry Burns, Assistant Vice President of Products and
Investments at OneAmerica, a more than 140-year-old financial
services company.
PA: What advantages can Personalized Retirement Accounts,
or PRA, have over traditional DC investments?
Terry Burns: It's all about asset allocation and adapting to changing
circumstances. In our participant surveys and research, we've
found that everyone needs help-no matter their income, age,
or industry. The PRA approach seeks to serve the needs of all
of them and remove the guesswork from investing. While target
date funds can be a good start, they're anchored solely on participants'
ages. The PRA tool reaches a higher level of customization,
incorporating demographic and financial information that enables
Russell Investments to create a unique retirement roadmap for
each individual and revise that plan for changes in income, assets,
and markets. And from the sponsor's perspective, it can customize
the entire plan, starting at the participant level. That's why we
think PRA makes sense as a qualified default investment alternative,
or QDIA.
PA: One of the challenges of managed accounts has been gathering
enough supplemental information on each person. How
do you encourage that?
Burns: We're able to build tremendous insight from each participant's
age, gender, salary, contribution rates, and account holdings.
OneAmerica®
With this information, Russell Investments' Personal Retirement
Accounts then calculates an initial personalized asset allocation for
each individual.
But that's just the start. People can use our secure website to
access the Personalized Retirement Planner, and input information
about additional assets such as their IRAs, taxable accounts, and
their spouse's assets. With this additional data, Russell Investments
can develop a holistic perspective of an investor's financial situation
and personalize the roadmap even further.
This account aggregation approach provides a more complete
picture. Combined with adaptations over time, participants can
potentially realize a better outcome at retirement.
PA: How often is the asset allocation adjusted and rebalanced?
Burns: Personalized Retirement Accounts reevaluate the asset
allocations quarterly. And it's not just a rebalancing-the adaptive
technology provides a fresh analysis to review whether
the individual is on track for a maximum expected retirement
income.
PA: Does the PRA tool change the role of plan advisers?
Burns: No-they remain central to managing the plan. They still
guide sponsors on plan design and choose the investment vehicles
as a function of providing fiduciary services. We think PRA is a
strong complement to the services they already provide.
PA: What additional fees are involved for the managed
account?
Burns: We expect the cost of the PRA service will come in at
between 18 and 28 basis points. That's about half, or less, of the
50 basis points typically charged for managed accounts. We think
there's a lot of value there. OneAmerica is also present with our
relationship managers to support all involved in their plan design
and education strategies. n
is the marketing name for the companies of OneAmerica.
Products issued and underwritten by American United Life Insurance Company® (AUL), a OneAmerica company.
Administrative and recordkeeping services provided by McCready and Keene,
Inc. or OneAmerica Retirement
Services LLC, companies of OneAmerica which are not broker/dealers or investment advisors. Provided content is
for overview and informational purposes only and is not intended and should not be relied upon as individualized tax,
legal, fiduciary, or investment advice.
Russell Investments is not an affiliate of any OneAmerica company.
Personalized Retirement Accounts are a product of Russell Investments Capital, LLC. Personalized Retirement
Accounts utilize processes and components of Russell Investments' U.S. patent number 8,671,045, entitled " Method
and System for Implementing an Adaptive Investing Methodology. "
SPONSORED SECTION

PLANADVISER - November/December 2018

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