Morningstar Makes Its Case for Managed Accounts

Almost two-thirds of retirement plan participants who were considered “off-track” for retirement increased their saving rates after enrolling in a managed account, according to Morningstar’s 2025 edition of “The Impact of Managed Accounts on Participant Savings and Investment Decisions.”

Morningstar’s report analyzed changes in investing and savings behavior of 84,875 Morningstar Retirement Manager users during 2024, before and after enrolling in the firm’s managed accounts service.

The report comes as assets in managed accounts continue to grow: Cerulli Associates reported that managed account assets grew 19.8% to reach $13.7 trillion in 2024. Last year, Edelman Financial Engines celebrated the growth of managed account assets to $210 billion in 2024 from $88.2 billion in 2023.

Survey participants who were both considered “not on track for retirement”—with projected retirement income less than 70% of their salary, and “self-directors”—with less than 90% of their portfolio in an allocation fund, such as a target-date fund—were the participants most likely to “reap the greatest benefit” from managed accounts.

The survey was performed based on a 40-basis-point “proxy for the average fee assessed by managed account providers today.”

“Our managed accounts are designed to provide personalized advice and help investors understand how to achieve their retirement objectives,” wrote Tao Guo, director of retirement research at Morningstar and co-author of the report, in an email. “When someone [was] identified as not-on-track for retirement, our managed accounts service would recommend a larger savings [rate] and, most importantly, these recommendations were approved and implemented by [the] investors.”

Prior to enrolling in managed accounts, 73% of those participants surveyed were not on track for retirement and 58% were self-directors, Morningstar found. After enrolling, 42% of on-track participants increased their saving rates, in addition to the 65% of off-trackers who did so.

The firm also found a 33% increase in the median deferral rate for not-on-track participants and a 12.5% increase in the median deferral rate for on-track participants. Another 10% of off-track participants and 5% of on-track participants increased their deferral rates to fully take advantage of their employer match.

“Investing through a managed accounts service further placed participants into what we consider more efficient, high-quality, and risk-appropriate portfolios,” the report stated. “For both self-directors and allocation fund users, we observed improved expected annual returns both in nominal and risk-adjusted terms. Self-directors also experienced an increase in utility due to their more risk-appropriate portfolios.”

Additionally, average changes in saving rates were larger for younger participants than for older participants, Morningstar found. After enrolling in managed accounts, the effects of savings could be felt more strongly on younger participants than on older participants because of the longer period available for the young cohort’s wealth to compound.

On-track participants also tended to be younger, with lower salaries, higher balances and higher deferral rates than older participants, the report stated. The average not-on-track self-director saw a 43% increase in retirement wealth, and the average not-on-track allocation fund user saw a 30% increase in retirement wealth after enrollment.

“By adjusting participants’ savings and investing decisions, managed accounts can have a positive effect on their retirement outlook,” the report stated. “[Morningstar] believe[s] that managed accounts can have a tremendous impact on the everyday investor who may not be aware that they are off track and/or are unable or unwilling to hire a personal financial advisor.”