Firms Roll Out Personalized QDIAs
Russell Investments and Envestnet Retirement Solutions have teamed up to offer a “managed” qualified default investment alternative (QDIA) for defined contribution plans.
Russell Investments’ Adaptive Retirement Accounts automatically create customized asset allocations for each participant by drawing on personal information from record-keepers or human resources systems. Participants will be able to further customize a personal “glide path” of allocations by entering their preferences online.
“Individual differences in participants’ savings and market experiences can have a meaningful impact on targeted retirement income replacement goals. This offers an alternative to target-date funds that focuses primarily on one simple data point—a participant’s age,” said Andrew Scherer, director of defined contribution at Russell Investments, in a statement. “We believe this solution can help empower the advisor and the consultant to fulfill their fiduciary duties in areas such as plan design and investment selection. It provides a strong managed QDIA option that addresses the industry’s heightened focus on ensuring fiduciary standards are met.”
The Adaptive Retirement Accounts use Envestnet’s Qualified Individualized Life Target Solutions technology to create personalized retirement portfolios in a cost-efficient, easy-to-use solution.
Russell Investments said that it designed the QDIA to combine multi-asset investing and customized allocations while meeting ERISA and Department of Labor fiduciary standards, taking default alternatives beyond target-date funds and toward an automated—yet personalized—solution.
The companies said the new option will be available in the first half of 2017.
Betterment Launches Tax-Managed Robo Accounts
Betterment has launched a tax-managed portfolio addition to its robo-advisor platform.
The “Tax-Coordinated Portfolio” uses asset location in an attempt to boost an investor’s cumulative after-tax returns.
The feature starts by placing an investor’s assets that are taxed more into IRAs while placing more tax-advantaged assets into the investor’s normal taxable accounts.
Betterment’s proprietary research shows that tax-sensitive asset location strategies can boost returns by 48 basis points each year.