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Managed accounts: A personalized employee benefit for retirement and financial wellbeing

Personalized approach to retirement and financial wellbeing

The value of employer wellbeing benefit programs continues to be a focus year after year, amplified more so by the impact the pandemic has had on everyday life. Despite the investments employers have made in expanding their benefit programs, employees continue to struggle as less than half feel positive about their overall wellbeing.1

Unfortunately, there is not always a clear path forward. With family, career, school, and other pressing obligations vying for people’s attention, health and saving for retirement is often last on their list. And, even for those employees that are saving, making the right benefit decisions and spreading their hard-earned dollars across health and financial priorities is a struggle. This can lead to downstream health and productivity losses, which greatly impact an organization’s bottom line. 

One financial wellbeing benefit that can help is managed accounts - offering employees access to a trusted financial expert, personalized investment recommendations, and guide them toward improved retirement outcomes.


Looking to employers for help with financial decisions

Workers are now looking to their employers for help with making better financial decisions to reach their goals, such as providing trusted and reliable resources during times of economic uncertainty or market volatility. Financial wellbeing is unique to each individual and solutions like managed accounts, online advice and one-on-one financial counseling have become common, with roughly 60 percent of employers offering these services.2 Additionally, more than half of employers believe the importance of financial wellbeing programs has increased at their organization over the past two years, and 79 percent believe they should provide a tool to help workers save for retirement and long-term needs.3   

Each person’s financial situation is different, and ideally retirement plans should have the flexibility to be tailored to provide better outcomes. Employees need a trusted resource, an expert in health and wealth who promotes total wellbeing, whose interest aligns with theirs.

Benefits of managed accounts

A managed account solution offers employees personalized investment recommendations and guides them to better retirement outcomes. With managed accounts, employees have the ability to hand investment decisions over to a knowledgeable professional. They receive independent and unbiased guidance ensuring accounts will be managed in the best interest of the participant. This advice enables the retirement strategy to stay on course and aligned with long-term goals, alleviating stress for those who do not have the time, resources or expertise to do it on their own. 

Help your people feel good about what’s to come. We’ll show you how.

Alight research found that over a 10-year period, the returns for participants who used managed accounts were 0.27 percent higher net of fees per year than people who didn’t use them. Managed accounts also had a higher user retention rate than Target Date Funds, which do not consider employees’ specific retirement goals or account for complex financial needs. Additionally, managed accounts and Target Date Funds are intended to be long-term investment vehicles; however, over a 10-year period 74 percent of managed account users remained in the program compared to just 33 percent of TDF users.4

Employees aren’t the only ones reaping the benefits of defined contribution managed accounts. According to our 2021 Trends & Experience in Defined Contribution Plans, 99 percent of employers rank managed accounts as effective. That’s not surprising considering that employees working beyond their intended retirement or extending their working years can have an impact on the bottom line. A one-year increase in average retirement age can increase workforce costs about 1–1.5 percent annually.5

Having enough money for healthcare, living expenses and other obligations is a mind, body and wallet balancing act. When successful, it can lead to feeling confident in a secure and healthy future.

With managed accounts, employees can become financially prepared for retirement and organizations can keep their bottom line in check.

Helping employees become financially prepared for retirement helps keep an organization’s bottom line in check.

1 Alight Solutions, Employee Wellbeing Mindset Study, 2021

2 Alight Solutions, Trends & Experience in Defined Contribution Plans, 20213 Alight Solutions, Hot Topics in Retirement and Financial Wellbeing, 2022

Alight Solutions, Hot Topics in Retirement and Financial Wellbeing, 2022

Alight Solutions, The Impact of Managed Accounts and Target Date Funds in Defined Contribution Plans, 2018

5 Prudential Insights, “The Cost of Delayed Retirements,” June 2019

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