The managed account becomes the default

NAPA added a Managed Accounts Bootcamp to the advisor agenda at its annual Summit in Tampa this year, and the material around it explains why a 2008-era QDIA is suddenly the product to understand. According to NAPA Net’s coverage, a 2025 Morningstar study found 73 percent of plan participants were not on track to replace 70 percent of their working income, and 65 percent of that group increased their savings after enrolling in a managed account by an average of two percentage points of salary. The result concerns deferral behavior rather than target-date glidepath design, which is why the managed account is moving from the à la carte side of the menu toward the default line.

Managed accounts have held qualified default status for nearly two decades—the QDIA regulations that followed the Pension Protection Act of 2006 put them on the same eligible list as target-date funds and balanced funds in 2008—and the working definition is straightforward: a discretionary investment management service for an individual participant’s retirement account, in most cases built from investments already available on the plan menu. What varies is who runs it.

The recordkeeper can build the account through an RIA, or the plan’s own advisor can run it as an advisor-managed account, and NAPA Net reports the advisor version has become the more popular of the two in recent years, as advisors use it to customize beyond a target retirement date, personalize the advice, and in some cases attach a revenue stream. The same article observes that managed accounts have historically been à la carte offerings, and that positioning appears to be shifting as plan sponsors and advisors look for something more specific than a date-based default.

The shift has evidence behind it: the 2025 Morningstar study cited by NAPA Net found the savings response concentrated among the participants who needed it, with 65 percent of the 73 percent behind on their income-replacement target raising deferrals after managed-account enrollment, and Morningstar’s August research found managed-account users contribute up to 2.3 points more, with the biggest gaps in voluntary-enrollment plans. The two studies describe the same mechanism from opposite ends: a managed account does not have to beat a benchmark to matter; it has to change the amount a participant saves.

That is the detail plan fiduciaries should hold onto, because the contribution effect is observable account by account and makes the managed account an intervention rather than an investment selection. For a participant who has drifted years from an adequate savings rate, the discretionary manager is the mechanism that raises the rate.

The second reason managed accounts matter is regulatory: the Department of Labor’s proposed rule on alternatives in defined-contribution plans is widely read as encouragement to consider private-market investment options, and NAPA Net’s coverage says managed account programs provide a convenient vehicle for those solutions. That convenience is structural—a target-date fund pools everyone into the same allocation, while a managed account is the one account in the plan that can vary from participant to participant, which is exactly the flexibility an alternatives sleeve needs. If the DOL rule lands as expected, the managed account becomes the natural distribution point for private assets inside DC plans.

For buyers and sellers of retirement-plan advisory firms, the important fight is over who controls that distribution point, and as this publication has argued, buyers are moving past recordkeepers to the feature that answers the squeeze—the shortfall the Morningstar numbers quantify. The recordkeeper-led managed account is a service, and the advisor-managed account is a relationship with discretion attached. The AMA has the momentum, the revenue potential, and the participant meeting, and the DOL’s alternatives push is about to make all three more valuable.

Plan sponsors will keep target-date funds on their menus, but the coming RFPs will be decided by who can explain the managed account, who directs its choices, and whose version of the default produces contribution data like the kind NAPA Net brought to Tampa.