Why Workers Leave Matching Dollars on the Table

Managed Accounts Offer a More Personalized Approach

Morgan Stanley retirement study findings released today show some employees tightening their belts; looking for more retirement planning assistance from employers

Target-date funds have long played a vital role in giving American workers access to professional help when establishing and maintaining a diversified investment portfolio. However, the glide paths — the balance of stocks, bonds, and cash — that serve as the foundation for these platforms has traditionally been based on a single consideration: the participant’s projected date of retirement. To be fair, target-date funds have played an important role in helping millions of novice (and even expert, but busy) retirement plan savers invest in broadly diversified portfolios overseen and rebalanced on a regular basis by professional investment managers. But the allocation of those investments between investment classes — the glide path — is still often based on that one demographic factor. Still, it’s no more precise than a broad five- or 10-year time frame that approximates a traditional retirement age — which may, or may not, apply. That means, of course, that those investment allocations can be oblivious to key demographic considerations like gender (women tend to live longer), marital status (ditto married individuals), race, and health, as well as investment risk appetite and other means of retirement income support. In short, they can overlook the kind of things that would be considered if there were an opportunity to sit down in a one-on-one conversation with a financial advisor. Enter managed accounts — a solution that considers an expanded array of personal considerations like those noted above. These accounts craft a more relevant, personalized portfolio based on individual variables that can have a huge impact on how a retirement investment portfolio is designed. Traditionally, this was done via a one-on-one interview with an individual. But these days much of this data can be found in payroll systems and/or may already be maintained in recordkeeping platforms — or fields present in standard wealth management programs. The Potential Impact A Morningstar study found that after using managed accounts, 72% of participants who were off-track in saving for retirement increased their savings rates. At median, this represents a 33% jump from what they were contributing previously, or about 2% of their salaries on average. Additionally, a larger number of off-track participants (12%) started contributing enough to receive the full employer match. The study also found that after using managed accounts, participants’ assets were placed into portfolios that were more risk-appropriate. Moreover, the researchers noted “improved expected annual returns both in nominal and risk-adjusted terms.” The Bottom Line Managed accounts can provide retirement savers with a more personalized asset allocation — but not every managed account platform provides the same depth and level of customization. Additionally, that level of personalization comes at a price. Plan fiduciaries should carefully consider the cost, quality, and composition of those designs. They should also document how and why services were evaluated, selected, deemed necessary — as well as compensated — when adding a managed account option to their lineup. Sources: https://www.nytimes.com/2025/02/25/well/longevity-women-versus-men.html https://fortune.com/2023/01/13/why-are-married-men-healthier-on-average-women-gender-research/ https://www.morningstar.com/lp/impact-of-managed-accounts-2022update

Threats of financial penalties and legal liabilities heighten the need for proper compliance with the Employee Retirement Income Security Act of 1974 (ERISA). Let’s go over the basics of what it means to be a fiduciary in an organization’s retirement plan. What is a Fiduciary? In basic terms, a fiduciary is a person or group in a company that is responsible for the retirement plan and does what is best for the participants in the plan. There can be three different kinds of fiduciaries in a plan: Named Fiduciary: This person or group is named specifically in the plan rulebook. There can be multiple people to handle different tasks such as investments and reporting. Appointed Fiduciary: A named fiduciary is allowed to assign fiduciary responsibilities to another person such as an investment manager to handle monetary decisions. Functional Fiduciary: This is someone that isn’t appointed as a fiduciary on paper, but steps into the role. Even if they aren’t officially listed on the plan rulebook, they legally become a fiduciary. Fiduciary Obligations According to ERISA, there are 4 main duties of a fiduciary: Acting in the best interest of the retirement plan participants, not the fiduciary’s or company’s. Making careful and knowledgeable decisions involving retirement plans. Don’t put your eggs in one basket. Spread out investments to reduce risks. Follow the plan rulebook unless it goes against federal guidelines. In addition to these main duties, there are additional tasks assigned to plan fiduciaries. Reporting, keeping records, and handling claims are large responsibilities that can result in major penalties if not completed correctly. To begin, fiduciaries need to annually file a Form 5500 with the government to be transparent with plan performance. Failing to do this can include up to $2,670 per day from the Department of Labor as well as IRS penalties. Keeping records related to the plan as well as sharing these records with participants will be important for any potential legal disputes that arise. Any claims made by participants about their retirement plans must also be handled by the plan fiduciary. Plan fiduciaries carry a big responsibility, and it’s important to operate fairly for the sake of the plan participants as well as know the regulations to mitigate any future liability issues. Source: https://www.plansponsor.com/fiduciary-basics-for-new-plan-sponsors/

Day-to-day financial stress tops employee concerns, but most employers still focus on long-term retirement planning.

We understand that most retirement savers aren’t financial experts, and that can make preparing for retirement feel overwhelming. The good news is that achieving a successful retirement doesn’t have to be complicated. By following a few basic steps, you could set yourself up for long-term financial security. Start Saving Now and Learn the Basics of Saving and Investing The earlier you begin saving, the better your chances of reaching your retirement goals. It’s also important to understand the foundational concepts of saving and investing. Familiarize yourself with the different types of investment products, such as stocks, bonds, and money market accounts. Each comes with its own set of risks and potential rewards, and knowing how they work—and how they fit into your overall portfolio—can help you make informed decisions. Take time to understand the details of your retirement plan and the benefits it offers so you can make the most of it. Avoid Common Mistakes Many retirement savers fall into the same traps: failing to diversify their investments, neglecting to rebalance their portfolios, making emotionally driven decisions, or not having a clear investment strategy at all. One of the best ways to avoid these mistakes is by focusing on that last item—developing an investment plan. Having a well-thought-out approach to investing can help you stay disciplined and better positioned for long-term success. Focus on Three Critical Components of an Investment Plan While you can’t control the ups and downs of the market, there are three key factors you can control: when you start saving, how much you save, and when you plan to retire. Starting early and contributing consistently often has a bigger impact on your retirement outcome than investment returns alone. Choosing when to retire is also critical. Delaying retirement, even by a few years, can give your investments more time to grow and provide greater financial stability. Monitor the Plan and Adjust as Necessary A strong retirement plan isn’t static—it should evolve with you. Major life events such as a new job, a growing family, changes in income, or unexpected financial challenges should all prompt a review of your retirement strategy. Regular check-ins can ensure your plan remains aligned with your goals and helps keep you on track for the future you envision. Looking for more information? Contact the IRPC Team at info@irpcsp.com to learn more about our fiduciary support, plan design consulting, participant education resources, or anything else you need to strengthen your retirement plan.

Plan sponsors, stay ahead of the curve! This issue covers key trends like early retirement, hardship withdrawals, and market volatility. Get practical tips to boost employee financial security, improve plan design, and enhance participant engagement.

EBRI research found that most Americans are confident about retiring, but 79% of retirees and 71% of workers expressed concern about changes to Social Security.

In times of volatility, timing the market may seem tempting. But doing so could cost you.