“While advisor managed accounts (AMA) are new to the 401k and defined contribution market, they have gained notable traction among providers over the past two years,” Cerulli Associates reports.
A series of new AMA program launches and new AMA-related partnerships between recordkeepers, registered investment advisor (RIA) firms, and managed account providers have occurred recently.
“In contrast to traditional DC managed account engagements, digital experiences where participants may have the option to work with an advisor from the managed account program firm, AMAs allow the DC plan’s advisor—typically an RIA firm—to advise participants on a one-on-one basis via their plan’s managed account platform,” the Boston-based research and consulting firm writes in the latest issue of The Cerulli Edge—U.S. Monthly Product Trends.
It notes that Morningstar’s AMA platform, which the firm launched in 2019, “extracts participant-level data from the plan’s recordkeeper to assign a risk capacity for the individual participant at hand. Using this assigned risk capacity and other participant information, the plan advisor constructs a custom portfolio for the participant.
“Other managed accounts providers, including NextCapital and Stadion, also offer AMA platforms, and in 2019, Empower, the industry’s second-largest recordkeeper by assets under administration, began offering advisor managed account solutions on its recordkeeping platform,” the report adds. “The AMA opportunity has also garnered interest from asset and wealth managers without an entrenched position in the DC managed account space. For instance, in January 2021, Franklin Templeton announced plans to launch an AMA program, using its proprietary Goals Optimization Engine methodology, in partnership with recordkeeper Vestwell.”
Retirement plan advisors
On the plan advisor side, Cerulli writes that RIA aggregator firms, including CAPTRUST, SageView, Resource Investment Advisors (part of OneDigital), and Pensionmark “have been active in the AMA space. For many of these firms, working with participants in a one-on-one capacity within a managed account setting allows them to deliver personalized advice to middle-market ($100,000 to $500,000 in investable assets) and mass affluent ($500,000 to $2,000,000 in investable assets) DC participants in an efficient, scalable manner.”
Cerulli concludes by noting that for plan advisors with both a retirement plan and wealth management practice, AMA participant engagements are prime opportunities for RIA firms/advisors to attract new wealth management clients.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
