Displaying items by tag: defined contribution

The financial industry is evolving rapidly, with new technologies helping advisors streamline operations and enhance client relationships. Investing in the right tools can give firms a competitive edge while also improving talent retention, as many advisors seek better technology. 

Essential tools include CRM software, which centralizes client interactions, financial planning software for scenario modeling, and risk analysis tools to assess investment strategies. Fi360 offers data and technology specific to advisors that can improve their efficiency. 

Additionally, scheduling software simplifies appointment management by automating bookings and reminders. Selecting the best options—such as Salesforce for CRM, Fi360 for financial planning, or Calendly for scheduling—can optimize efficiency.

 Finsum: With Fi360 advisors have the right technology and can focus more on delivering personalized financial strategies and strengthening client trust.

Managed accounts are set for a major transformation as current models often benefit providers more than participants due to high fees. Employers must evaluate how providers personalize portfolios and whether participants actively engage with these features. 

While managed accounts generally offer strong investment management, fee structures can erode some of their value, requiring significant equity exposure increases to match target date fund returns. Personalized portfolio returns tend to fall within a narrow 5% to 7% range, with minor impacts from strategic asset allocation shifts. 

A subscription-based model could better align incentives, offering lower-cost options for less engaged participants while providing premium services for those seeking greater customization. Inconsistencies in provider methodologies, driven by factors like risk tolerance and retirement readiness, highlight the need for greater transparency. 

Finsum: This is an interesting strategy, but if done properly managed accounts are a great vehicle for retirement and defined contribution. 

Managed accounts have evolved beyond simple investment tools to become a key retirement income solution within defined contribution plans. While their availability has increased significantly over the years, participant adoption remains low, with only 7% utilizing these accounts despite widespread access. 

Critics point to ongoing fees as a drawback, though proponents argue that managed accounts provide tailored financial planning, including retirement timing and Social Security optimization. 

Some newer offerings even incorporate annuities or structured withdrawal features, turning managed accounts into a direct retirement paycheck solution. This customization makes them an attractive option for plan sponsors considering alternatives to traditional target-date funds. 

Finsum: As the marketplace continues to adapt, managed accounts are gaining traction as a more personalized and flexible retirement planning tool.

The defined contribution investment-only (DCIO) industry continues to grow, reaching record asset levels despite increasing pressure on fees and revenue models. Target-date funds (TDFs) remain a dominant force, with more plan sponsors considering active management strategies to enhance participant outcomes. 

At the same time, large passive fund managers are introducing competitively priced active funds, creating new market dynamics. A key decision for advisors is knowing when to pull the trigger on a switch to active plans, and a riskier economic environment can be the right opportunity. 

Meanwhile, personalization is becoming a key focus, though legal challenges surrounding managed accounts may slow adoption. Lastly, collective investment trusts (CITs) are gaining ground on mutual funds, with potential legislation poised to expand their availability in 403(b) plans.

Finsum: DCIO is an ongoing process and shouldn’t be treated like a static one-time decision, consider traditional portfolio strategy and customization as opportunities to shift DC investments. 

The 401(k) industry has played a critical role in improving retirement security, yet challenges remain, including access gaps, rising costs, and demographic shifts. Defined contribution (DC) plans are evolving to address these issues, with major trends shaping the future of retirement savings. 

Affordability is increasingly strained as rising costs for essentials make it harder to prioritize retirement, especially for mid- and lower-income earners. Legislative changes, such as SECURE 2.0 implementation and potential tax policy shifts, could impact retirement savings strategies in the coming years. 

Meanwhile, industry consolidation and integration are reshaping financial services, enhancing efficiency and expanding participant-focused solutions. Innovations in AI, private assets, and fiduciary services are driving new approaches to personalized retirement planning, making financial security more accessible and adaptable.

Finsum: We should be very weary of policy changes to 401(k) plans, while it’s unlikely that Trump makes any changes, the sheer number of policy changes make it worth monitoring.