Investing April 10, 2002

Tax-Exempt Share of Separate Accounts Expected to Swell

April 10, 2002 (PLANSPONSOR.com) - Tax-exempt accounts, such as 401(k)s and pensions, are expected to gain a larger share of the separately managed account market over the next decade - a market expected to experience significant growth, according to new research.

Reported by

Fred Schneyer

In fact, tax-exempt assets could make up 40% of the assets under management in that industry by 2011, up from 35% today according to a new study of the managed-account industry by Financial Research Corp. (FRC), a financial-services research group.

Doubling Up

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news. 

And that increasing share will come from a growing product segment. The amount of assets held in separately managed accounts is expected to more than double by 2005 and triple six years after that.

Managed accounts are individual accounts offered by financial consultants utilizing a range of advisory services. They are usually managed by professional, independent money managers using an asset-based fee structure, according to FRC.

According to FRC projections, separately managed account assets are expected to grow from about $415 billion at year-end 2001 to nearly $1 billion by 2005. By 2011, FRC said the industry could have nearly $3 trillion under management. New asset flows in managed accounts will increase from $103.7 billion this year, to $231.9 billion in 2005 and $469.4 billion in 2011.