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Managed Accounts Benefit Employers and Employees Alike: Fidelity

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Managed accounts. What’s not to like?

So say an increasing number of employers and their employees, Fidelity Investments reported Wednesday.

Fidelity researchers examined how companies and their workers viewed and engaged professional help for their retirement plans, polling 212 corporate benefits managers, holding four focus groups and surveying 468 respondents online, in the first quarter of last year.

They found that 51% of employers considered managed accounts a good way to retain employees, and 49% said they helped recruit the best workers.

Fifty-seven percent of companies said workplace managed accounts were “very important” in helping their employees prepare for retirement. Fifty-three percent noted that managed accounts ensured appropriate retirement savings investing by their employees.

The research further showed that the more experience employees had with managed accounts, the more they appreciated them.

Forty-eight percent of users named regular monitoring of their investments as the offering’s chief benefit, while 44% said the annual review was essential and 38% found ongoing management helpful.

In contrast, workers who had not used a managed account were less likely to perceive their value. Thirty-nine percent of nonusers said they did not understand what was on offer, and 25% said they did not know enough about managed accounts to use the service.

However, their perceptions changed dramatically after receiving explanations of a managed account and the professional investment management it offered.

Fifty-four percent found the concept relevant, and 52% said it would be useful. Forty-six percent wanted more information.

Fidelity said in a statement that employers recognized the need for more employee education around “do it for me” solutions.

“Employees seek professional guidance to help them navigate the uncertainty in the markets,” Sangeeta Moorjani, senior vice president of Fidelity’s professional services group, said in the statement. “Workplace managed accounts serve as a ‘shock absorber’ to help cushion investors from dramatic swings.

“Companies are providing the educational resources and direction needed to help employees recognize the value so they can take full advantage.”

Fidelity noted that 80% of its clients who had adopted workplace managed accounts were using educational programs to inform their employees.

The firm also reported that its own managed account offerings had grown significantly in the past year. Assets under management in its professionally managed workplace and retail account portfolios stood at some $212 billion in 2015.

— Check out Time to Rethink TDF Use in Retirement Plans: Financial Engines on ThinkAdvisor.