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Benefits April 1, 2026
What Does Technology Mean for Personalization of Retirement Benefits?
The era of one-size-fits-all benefits may be fading, but it is far from gone.
Reported by
Kelli Korducki
A recent Transamerica survey found that 94% of retirement industry leaders and consultants expect that by 2030, defined contribution plan platforms will use employee data to deliver “hyper-personalized,” AI-generated financial advice tailored to individual needs. In the meantime, managed accounts represent one of the most established vehicles for personalized investment strategies and have become increasingly common in defined contribution plans.
Yet despite expanded availability, participant behavior continues to favor default investment options typically tailored only by the window of an employee’s retirement date. Researchers, providers and consultants say the discrepancy reflects not just participant inertia, but differences in plan design, communication and the level of support offered.
The Participation Gap
Alex Langan, the chief investment officer and a financial adviser at Langan Financial Group, attests that the retirement industry’s emphasis on the growth of managed accounts belies ongoing gaps in participation.
“Fidelity managed account availability went from 17% of plans in 2014 to 42% in 2023, and Vanguard says almost 80% of participants now have access to some kind of managed advice,” Langan says. “But access isn’t adoption. Having the option available and actually using it are two completely different things.”
Jeff Clark, Vanguard’s head of defined contribution research, confirms that roughly 80% of large plans administered by Vanguard offered managed account advice as of 2025. As a result, Clark says, more than 75% of participants have access to managed accounts. However, only about 10% of participants with access to managed accounts actually use them.
“In comparison, 61% of participants are invested in a single target-date fund, leading to a total of nearly 70% of participants invested in a ‘professionally managed allocation,’ as of year-end 2025,” Clark says—an all-time high driven largely, he says, by default investment options.
Craig Copeland, the director of wealth benefits for the Employee Benefit Research Institute, points to research from Morningstar suggesting participant engagement likely drives managed account adoption.
Though the new research shows that managed accounts have the greatest impact on savings for younger and lower- to middle-income workers, Copeland points out that managed accounts tend to be used primarily by higher-income participants who are already highly engaged. Less-engaged participants, on the other hand, are most likely to remain in default options such as target-date funds.
The engagement disparity reflects an ongoing retirement industry challenge: Responsibility for guidance and messaging is fragmented across vendors. Plans that are able to address the communication difficulty see improved engagement and, in turn, higher plan participation.
“Some providers and recordkeepers work very well together to make sure people understand that managed accounts are available and what they are,” Copeland says. “Others are just adding it to their plan because it’s something they’ve heard should be added because other people are doing it. Those that don’t have strong coordination between the recordkeeper and the managed account provider don’t tend to get the same type of results as those that are working more closely together.”
Cost is also likely a deterrent for managed account participation.
“These services typically run 40 to 60 basis points [per] year,” Langan says. “So if you’ve got $250,000 saved, you’re paying an extra $1,000 to $1,500 annually on top of your fund expenses. When you can get a target-date fund that does basically the same thing for a fraction of that cost, a lot of participants look at it and think, ‘Why would I pay for this?’”
For providers, simply answering that question could have a significant impact on participant uptake.
“Invesco just surveyed employees and found 93% want personalized plans and 76% say they’d pay more for it,” Langan says. “So the demand is there.”
The cost, however, and a system structured to under-deliver on engagement, remain sticking points.
“We’re not delivering personalization that actually sticks,” Langan says. “Without a human adviser staying on top of you, most people still drift back to doing nothing.”
Limited Evidence of AI Impact
Artificial intelligence-enhanced account infrastructure may one day provide solutions to the retirement industry’s fragmentation challenges. But there is little evidence so far that these tools are making a meaningful difference in changing participant behavior.
“On the retail side, I’m aware there has been a shift toward more personalized tools, but the industry is still evolving in terms of how sophisticated those tools are,” says Wenjia (Lucy) Liu, a former senior director and portfolio manager for Nuveen’s target-date multi-asset team.
In her current capacity as the founder and CEO of Teapot Investments, Liu is building AI-powered retirement tools to help amateur investors navigate retirement decisions. So far, she has found that even when AI can deliver appropriate guidance, many people still want the reassurance of working with a trusted adviser.
“Questions such as, ‘Can you sit down with me and go through it together?’ and ‘Can you run the numbers for me and manage it for me?’ come up a lot,” Liu says.
Copeland notes that many plan sponsors remain hesitant about standing behind AI-generated customization due to a lack of established benchmarks, documentation and guardrails for doing so. In contrast, he says, “managed accounts are generally offering recommendations under some type of model based upon what is available in the plan so that they can have some documented process in how it comes about.”
Langan argues that much of what is currently being sold as ‘AI personalization’ is just better automation of the same decision trees that have informed retirement investing for decades.
“What these tools actually do is pretty straightforward,” he says. “They look at your age, salary and account balance, then adjust your investments and send you nudges to save more.”
As Langan sees it, the real solution is not “better algorithms,” but better-designed plans that make retirement saving automatic.
“Integrate it into payroll, make the right choices the default choices, and stop asking people to be their own financial advisers,” he says. “We’re not there yet, and until we are, these tools are just Band-Aids.”
