ARMONK, N.Y. — International Business Machines Corp., sponsor of the nation's largest corporate 401(k) plan, early next year will consider adding managed accounts as an investment option in its $23 billion plan.
Earlier this year, Jim Rich, chief investment strategist for IBM's $100 billion in worldwide retirement plan assets, had said company officials weren't going to consider such a move (Pensions & Investments, May 31).
Mr. Rich and his staff changed their minds partly because they acknowledge that some participants "don't have a natural aptitude for investing … (and) prefer to spend their time on other activities."
"We strive to provide the (investment) tools needed by a very diverse population," he added.
He also believes that managed accounts can "provide a more customized perspective and direction on investing for retirement." In a managed account, a professional money manager selects investments for a 401(k) participant's portfolio, based on that person's age and financial status, and updates it at least yearly. One example: "If you already have a lot of low-cost growth stocks in your taxable account, it may make sense to complement those holdings with value stocks in your 401(k) plan," Mr. Rich noted.
Mr. Rich also said managed accounts help participants gain insight into their prospects for a financially successful retirement. "Periodic, customized letters to individual participants can help individuals plan and take appropriate actions," he said.