Can You Truly Evaluate Managed Accounts Through Marketing's Rose-Colored Glasses?

Introduction

When plan fiduciaries evaluate managed account providers as an ERISA 3(38) investment manager of a participant’s portfolios, transparency is particularly significant. Over recent decades, the investment management industry has evolved in part because of the demand in many areas for increased transparency. We believe the next wave includes managed accounts. But if fiduciaries are presented managed accounts through rosecolored glasses, how can providers be held accountable for the outcomes?

Through increased transparency, plan sponsors can dive deeper into the “black box” of managed accounts to make informed decisions on which solution, if any, is the best fit for their population — based on variables such as demographic data significance, investment strategy and fee structure.

"Truth never damages a cause that is just." - Mahatma Gandhi

The following chart outlines various areas where we have seen firsthand how a lack of full transparency can create plan sponsor questions, misunderstandings and/or the inability to evaluate and set expectations for managed accounts.

In recent years, we have seen a positive trend toward increased transparency. Even so, we are still a long way from full transparency and disclosure across all providers. We believe there is a journey ahead to establish new standards industry-wide that can be driven by plan sponsors, consultants and regulators demanding transparency in all aspects of managed accounts solutions.

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