Using Managed Accounts as Qualified Default Investment Alternatives (QDIAs)

Using Managed Accounts as Qualified Default Investment Alternatives (QDIAs)

Target Date Funds have long dominated the 401(k) Qualified Default Investment Alternatives world, but that could begin to change as participant’s financial situations become too complex for simple TDFs, and as competition drives down the fees of managed accounts.

Managed accounts, while charging higher fees, allow for the use of ETFs, broader asset class allocation, and can offer a more holistic option for participants, taking into account other investments, special financial situations, and other sources of income such as social security. Managed accounts can be easily changed to accommodate a participant’s evolving financial needs as well. Managed accounts also allow for the use of more complex investment strategies that may be too complicated to be added as a stand-alone option. Through managed accounts, participants are able to access unique and specialized investment strategists, a broader asset universe, and ETF strategists.

While managed accounts may not be beneficial in all situations, they can be valuable for some participants, especially as their financial situation becomes more involved.  Read more at Employee Benefit News.