Episode summary
The Case for Managed Accounts
Summary
Spencer Look said Morningstar’s new defined contribution outcomes model, or Decom, is the key difference in this managed accounts study because it simulates real participant behavior rather than assuming a rational saver. He said the team fit behavioral statistical models on millions of participant observations across thousands of plans and controlled for factors like age, income, tenure, and plan design, including auto-enrollment and default deferral rates.
The study found higher retirement wealth for managed account users even after accounting for a 40 basis point advice fee. Look said higher savings rates were a major driver, with asset allocation differences also helping, especially for participants who self-direct investments beyond the core menu. The research also found larger relative gains for younger investors, shorter-tenure participants, and lower- and middle-income participants.
Across plan designs, Look said managed accounts showed value in volunteer enrollment plans, auto-enrollment plans, and auto-enrollment with auto-escalation. He stressed, though, that the results vary a lot by plan, so advisers and fiduciaries should not generalize the aggregate findings without doing a plan-specific analysis. Morningstar’s next papers will extend the 2026 managed accounts series, including a look at managed accounts as a QDIA or dynamic QDIA option.
Key takeaways
- Look said managed accounts were associated with higher retirement wealth even after a 40 basis point advice fee assumption.
- The biggest driver in the study was higher savings rates, with asset allocation changes also helping, especially for self-directed participants.
- Look said younger investors, shorter-tenure participants, and lower- and middle-income participants saw larger relative gains.
- The research found value across volunteer enrollment, auto-enrollment, and auto-enrollment with auto-escalation plan designs.
- Look warned advisers and fiduciaries not to apply the aggregate results broadly without a plan-specific analysis.
Notable quotes
“we are seeing higher retirement wealth in general from those who are using managed accounts”
“we are accounting for differences in how old someone is, how much they make, how, you know, how long they've been with the plan”
“there's just a lot of heterogeneity or I should say variation, you know, obviously at the participant level, but also at the plan level”
“we are seeing value from manage accounts. That's that's a clear clear finding in the piece”
How the episode opens
Greetings and welcome to Wealth Management's Fast Chat. My name is Fred Barstein, contributing editor at Wealth Management's RPA channel and CEO and founder of TPSU TR and 401k TV. Today we've got Spencer look from the Morning Star Center for Retirement and Policy Studies here to talk about the cent's latest research piece analyzing the value of managed accounts which is the first piece in the 2026 manage accounts research series.
So Spencer, let's get started by giving our audience a sense of who you are. give me a little uh background on yourself, your role, your experience in a retirement research and what motivates you uh motivates the work that you do.
Yeah, of course, Fred. And I guess just start off by saying thanks for having me on. Appreciate the opportunity.
Um as you said, uh Spencer look, associate director for the center for retirement and policy studies here at Morning Star. Um I've been at Morning Star for about four years now. Um I do a lot of quantitative um you know simulation based analysis.
I do have a life actal background and so one of the major focus areas of my work would be in defined contribution plan lifetime income you know in plan annuity based solutions. I also focus quite a lot on retirement income adequacy, both people with access to plans and those who don't have access to plans. And we we study the potential impact of new policy proposals or different different ways to, you know, impact behavior.
And then recently we've been really focusing on, you know, within a defined contribution plan setting, how can you, you know, what kind of interventions, what kind of things could be could be done at the plan level to improve outcome.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- managed accounts
- defined contribution plans
- retirement research
- lifetime income
- retirement policy
Companies and tickers mentioned
- MORN
- Morningstar
Watch the episode
Watch “The Case for Managed Accounts” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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