Morningstar Retirement and Envestnet are teaming up to launch a managed accounts service for Individual Retirement Accounts (IRAs) powered by IRALOGIX, the companies announced today.
The retirement groups within Morningstar Investment Management LLC, a subsidiary Morningstar, Inc., and Envestnet, a leading provider of integrated technology, intelligent data and wealth solutions, said the new offering will be custodied by Matrix, a subsidiary of Broadridge Inc., and will make it easy for individuals—regardless of account balance—to receive personalized investment advice on their IRAs.
“This service is a very powerful collaboration that we believe will give asset managers, broker-dealers, recordkeepers, and advisors options to shift the growing cost of administering their IRA programs to a private-labeled offering, while still retaining their existing revenue streams,” said Sean Murray, Head of Envestnet Workplace Solutions. “It is a win for investors. It is a win for asset managers. And it is a win for the wealth and retirement industry.”
It combines Envestnet’s fund selection and model portfolio-building capabilities with Morningstar Retirement’s managed accounts methodology, investment engine, and digital delivery platform.
“With the help of Envestnet Workplace Solutions and IRALOGIX, we aim to advance access to personalized investment advice and institutionally priced investment options in the IRA space.”
Brock Johnson, Morningstar Retirement
Expected to launch in the first quarter of 2024, the service will be packages within an IRA serviced by IRALOGIX, which offers low-cost investments by leveraging institutional share classes rather than retail share classes. Morningstar Investment Management’s platform blends those portfolios to design unique portfolios that are aligned with an account holder’s specific profile and situation. It then manages that portfolio for the account holder, adjusting the investment strategy as the person’s situation and investment objectives evolve.
The IRA product(s) will also have no minimum account size requirements, making it easier for those with low balances to gain access to personalized advice. IRALOGIX is a leading fintech company in which Morningstar Inc. is an investor.
“We believe the IRA space is ripe for innovation and personalization,” said Brock Johnson, president of Morningstar Retirement. “Nearly 40% of U.S. households own an IRA, yet the vast majority do not have an advisor and will never be able to retain an advisor because their balances are too small. With the help of Envestnet Workplace Solutions and IRALOGIX, we aim to advance access to personalized investment advice and institutionally priced investment options in the IRA space.”
The service uses the same platform that powers Morningstar Retirement’s traditional managed accounts service, which today brings personalized investment and savings advice to more than 2 million participants in employer-sponsored retirement plans. This latest managed account offering allows for Envestnet to develop the fund-level models that serve as the bedrock for the portfolio-building process within the IRA service.
The managed IRA solution enables Envestnet to develop model portfolios based on an asset manager’s underlying proprietary funds and delivered through Morningstar Retirement’s managed accounts service.
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
