Morningstar and Envestnet are collaborating to offer a managed accounts service for individual retirement accounts with an expected launch in the first quarter of 2024, the companies announced Nov. 6. "We believe the IRA space is ripe for innovation and personalization," Brock Johnson, president of Morningstar Investment Management LLC, a Morningstar subsidiary, said in a news release.
"Nearly 40% of U.S. households own an IRA, yet the vast majority do not have an advisor and will never be able to retain an advisor because their balances are too small," he said.
"This service is a very powerful collaboration that we believe will give asset managers, broker-dealers, record keepers and advisors options to shift the growing cost of administering their IRA programs to a private-labeled offering, while still retaining their existing revenue streams," Sean Murray, head of Envestnet Workplace Solutions, said in the news release.
The IRA service "combines Envestnet's fund selection and model portfolio-building capabilities" and Morningstar's "managed accounts methodology, investment engine and digital delivery platform," the news release said.
The custodian is Matrix, a subsidiary of Broadridge. The investments will placed in an IRA offered by the fintech company, IRALOGIX, "which offers low-cost investments by leveraging institutional share classes rather than retail share classes," the news release said. Morningstar owns a minority stake in IRALOGIX