Should Your 401(k) Be ‘Custom Made’?
The term “custom made” has long been associated with the finest products. But custom-made products aren’t limited to cars, clothes and furniture. In fact, 7% of 401(k) plan participants on Vanguard’s platform have their 401(k) asset allocation customized to their individual requirements using an advice tool commonly known as a managed account (MA).
Under a managed account program, a plan sponsor selects a third-party adviser to provide independent investment advice to participants. Some plans offer a choice of providers, but many only make one product available.
Participants who enroll in the service are asked to provide the adviser with additional information, such as their risk tolerance, assets outside their 401(k) plan, and expected retirement date. Using this information, the provider will develop the participant’s overall asset allocation, choose investments and monitor and rebalance the
