PLANSPONSOR Roadmap: Participant Personalization in Investment Menus

Though by definition customizable, personalized investment menus may be more appropriate for plan participants in specific demographic groups, according to panelists at the 2026 PLANSPONSOR Roadmap session, “Participant Personalization in Investment Menus.”

During the third and final session of PLANSPONSOR’s Plan lnvestments Livestream Series, industry experts discussed which participants might benefit most, why employers desire personalization, and what prudent fiduciaries can do to ensure they are offering the right solution for each participant.

Though by definition customizable, personalized investment menus may be more appropriate for plan participants in specific demographic groups, according to panelists at the 2026 PLANSPONSOR Roadmap session, “Participant Personalization in Investment Menus.”

During the third and final session of PLANSPONSOR’s Plan lnvestments Livestream Series, industry experts discussed which participants might benefit most, why employers desire personalization, and what prudent fiduciaries can do to ensure they are offering the right solution for each participant.

Customization Trade-Offs

While there are circumstances in which a more personalized solution can supplement or replace a target-date fund—defined contribution sponsors’ near unanimous choice of default investment option—personalization may not be right for younger participants, according to Patrick Donnelly, an investment director of defined contribution and wealth management at CBiz Investment Advisory Services LLC.

But “there is an appetite [for customization], as folks get older and life circumstances deviate, where something outside of a TDF might make sense for them,” Donnelly said. “Ultimate customization goes beyond age and risk tolerance” and puts participants in a model based on factors including outside assets, plans for a non-standard retirement age, spousal income, region and estimated Social Security benefit payments.

Customization is not free, however, so there is a “cost-benefit analysis that a participant would have to run” before moving to a more personalized investment approach, Donnelly added. He said managed accounts are examples of solutions in which interest is starting to pick up steam, even though they are more expensive than TDFs.

A managed account is generally meant for high-net-worth individuals and typically includes a minimum account balance. Managed accounts can provide personalized investment management tailored to goals and circumstances, such as those Donnelly described.

Chris Bailey, who leads research for Cerulli Associate’s retirement practice, estimated that approximately half of plan sponsors offer managed accounts to participants. He says that despite the accounts’ availability, approximately 5% of DC participants use one.

Among all plan sponsors that responded to PLANSPONSOR’s 2026 Plan Benchmarking Report, 43.6% said their organization offered professionally managed account services as investment vehicles for participants.

“The answer should not be that 100% of participants are in a managed account, but the answer should probably be more than 5%,” Bailey said. He attributed “low adoption” to a lack of awareness and forgetfulness among participants, explaining that participants may hear about the accounts when they join their company’s plan but forget the option is there by the time their account balances grow or other circumstances of their lives become more complex.

Plan sponsors, however, only have so much bandwidth to remind participants about the availability of the accounts, Bailey said. A participant’s inertia may get in the way of a decision as to whether a managed account is right for them, leaving the participant invested in the TDF only.

Self-directed brokerage windows are another less common type of personalized offering, Bailey added. A self-directed window enables participants to invest in a broader range of stocks, bonds and funds than those included in the plan’s menu. Money invested through the window remains in the tax-advantaged retirement plan account, but the participant can direct it to some investments through a linked brokerage sub-account.

Bailey said those options would be best for a participant interested in investing on their own. As with managed accounts, he said participant awareness of brokerage windows is lacking .

According to PLANSPONSOR’s 2026 Plan Benchmarking Report, 29% of all responding plan sponsors offered a self-directed brokerage window. Adoption was just higher than 60% among the largest plans.

Evaluating Personalization as Prudent Fiduciary

Chuck Williams, CEO of corporate retirement plan consultancy Finspire, said plan sponsors’ goal in providing personalization is to “focus on delivering the right solution for each participant.” He said an employer can be competitive, altruistic and rewarding by offering customization tools within their plan’s investment menu. Williams says the issue of personalization often comes up when plan sponsor clients are looking for things they can offer to help retain their employees without incurring additional costs.

The “most practical question” plan sponsors can ask before adding an investment solution, Williams said, is whether participants are likely to utilize it.

“Do [my] participants need something beyond a traditional TDF?” Williams suggested that sponsors ask. “That’s what’s driving a lot of these discussions.”

The strongest trend Williams said he has seen among plan sponsors is in “enhancing” qualified default investment alternatives and, more specifically, in adopting managed accounts.

When asked whether fiduciary duties change when considering a customized solution such as a managed account, Williams said only the process changes—an additional “layer” of duty is added. But the job to act in the best interest of participants remains the same.

“It’s common that a provider will come in and present a managed account solution, and a plan sponsor will say, ‘yeah, add this in,’” Williams says. “But sometimes [the plan sponsor] has to pump the breaks and know how it’s managed relative to what [else is] moving into the market and understand the nuts and bolts behind it.”

PLANSPONSOR’s 2026 Plan Benchmarking Report is based on PLANSPONSOR’s 2025 Defined Contribution Survey, fielded in mid-2025. The results incorporated the responses of 4,387 plan sponsors.