With its eyes on the $700 billion target-date fund market, NextCapital Group has launched a digital technology that will help advisors bring managed accounts to 401(k) participants.
Using a methodology developed by Russell Investments, which recently led a round of funding for NextCapital, advisors can build models and pick investments for 401(k) plans. They can then use the platform to help the participants manage their portfolios.
The managed accounts will have a low enough cost to serve as default investment options in company plans, the firm says.
“We’re a digital advisor that works with large partners to deliver world-class advice and investment management at the lowest cost on the market,” NextCapital CEO John Patterson said in a statement. “This global market requires a different approach, combining a new kind of platform for investors with a select group of longstanding players.”
Participants connect their brokerage, IRA, and 401(k) accounts to the NextCapital website. The platform works with most major 401(k) providers, including Fidelity and Vanguard.
Plan participants can choose to share their information with the advisor.
New technology that falls into the realm of being a robo-advisor can make some nervous. Many advisors fear technology being an adversary to their business, when in fact it could be an asset.
“This new technology will allow advisors to pick the funds they want to go into certain plans,” Dirk Quayle, NextCapital president, told ThinkAdvisor. “They are then able to work with the Russell methodology to pick what portfolios get certain plans.