A plan sponsor should consider several features and services for a well‐designed managed account program:
Independent Professional Investment Management
Participants enrolled in a managed account program should have their accounts professionally managed using an independent investment manager.
ERISA 3(38) Plan Fiduciary
The investment manager of the managed account program should agree in writing to act as plan fiduciary. This is important to providing the plan sponsor with the fiduciary protection afforded under ERISA. In addition, acting as a fiduciary means the investment manager must act in the best interests of the plan participants.
Personalized Portfolios
The account should be personalized to the participant based on his/her individual circumstances and needs, including consideration of additional investments and company stock holdings inside and outside of the plan.
Printed Personal Evaluations and Risk Disclosure
Participants should receive printed personal evaluations containing an analysis of their plan account including important disclosures with respect to contribution rates, portfolio risk and diversification, and company stock holdings.
Ongoing Account Monitoring and Management
A participant’s account should be reviewed by the investment manager periodically with adjustments made to the portfolio over time, including decreasing risk for the participant’s time horizon.
Direct Access to Investment Advisors
Participants in managed account programs should have ongoing direct access to investment advisor representatives who can answer specific questions about their plan accountant provide support as personal circumstances change.
Periodic Statements
Participants should receive periodic account statements to keep them informed about activity in their plan account and on track toward their retirement goals.
Cancellation Without Penalty
Participants should be free to cancel their participation in a managed account program at any time without additional fees or penalties.