Retirement plan advisers are adopting the latest variety of managed-account platforms as their new best friend.
Because the new platforms allow them to build their own participant portfolios — rather than sticking to those devised through computer algorithms — registered investment adviser firms are taking a shine to them.
CAPTRUST Financial Advisors, a $390 billion RIA firm with mostly retirement plan business, for instance, began rolling out Morningstar Inc.'s newly released adviser managed accounts platform in February. The firm has a dozen plan sponsors either already adopting or planning to adopt the platform and also has a strong pipeline of prospects, said Jennifer Doss, CAPTRUST's Raleigh, N.C.-based director and defined contribution practice leader.
"I'm so excited to see so many of our advisers using the program," Ms. Doss said. "We've been very pleased to see the broad-based interest and we've got broad-based interest from clients as well."
The platform so far is only available to plan sponsors that use Charles Schwab Corp. as their record keeper but plans are in place to roll out the platform to other record keepers including T. Rowe Price Group Inc., Principal Financial Group and Milliman Inc.
Steve Wilt, principal and financial adviser at CAPTRUST in Akron, Ohio, has eight plan sponsors ranging in asset size from $20 million to $100 million on the platform and says it provides participants with a "much more customizable solution" than if they were "just doing it online on their own" using a traditional managed account.
"The whole process is built around the participant having access to a real, live adviser to help them make good decisions around their retirement outcomes," Mr. Wilt said.
The number of participants using the new platform was not readily available given the number of plan sponsors currently in the process of adding the program, Ms. Doss said.
Morningstar is marketing its adviser-focused platform through large RIA firms with significant retirement plan business. In addition to CAPTRUST, Morningstar has signed on nine other firms, most of which are giants in the world of retirement-focused RIAs, including Sageview Advisory Group LLC, Resources Investment Advisors LLC, Pensionmark Financial Group LLC, NFP Corp., and Hub International Ltd.
"Most of them have a pretty large book of business that they could potentially sell adviser managed accounts to," said Jim Smith, senior vice president and global head of sales and strategy at Morningstar Investment Management in Chicago.
While assets on the platform so far are modest, standing at just $3.4 million, Morningstar sees assets growing rapidly as RIA firms go live and begin to onboard sponsors in earnest.
The fact that the adoption by plans has been a little slower than the number of RIA firms signing on is "less to do with the platform" and "more to do with the COVID situation," Mr. Smith said, adding that plan sponsors that were planning to adopt the service this summer are pushing it out to the fall.