Morningstar: Managed accounts correlate with higher employee retirement contributions

# What Morningstar studied Morningstar Investment Management analyzed millions of participants across thousands of defined-contribution plans to compare contribution behaviors for participants who use managed accounts versus those who do not. The authors are Spencer Look and Jack VanDerhei, Morningstar directors of retirement studies.

# Main findings The study finds a consistent association between managed-account use and higher employee contribution rates. Managed accounts provide personalized investment solutions and more support than default plan menus. Morningstar reports that participants with access to and use of managed accounts tend to save more and are more likely to contribute enough to receive the full employer match.

Concrete age-based examples the research reports:

• Participants aged 40–44 with managed accounts contributed at a 9.1% rate versus 7.2% for those without managed accounts.
• Participants aged 50–54 with managed accounts contributed at a 10.6% rate versus 8.3% for those without.

Morningstar notes the relationship is not uniform across every cohort or plan, but the pattern of higher contributions among managed-account users appears regularly in the data.

# Causality and interpretation

# Tax and behavioral implications Morningstar and outside commentators highlight two practical implications:

• Tax effects: Higher retirement contributions increase current tax-advantaged savings, which can benefit participants' long-term tax positions, according to Daniele Griffith, director of tax operations at April Tax Solutions.
• Behavioral barriers: Access to advisors or employer-provided financial education can reduce participant hesitancy about meeting with planners. Griffith said employer-provided advisor access, seminars, or communications can help participants feel the interaction is support-oriented rather than a sales pitch, which may lower barriers to saving more.

# What this means for plan sponsors and advisors For employers and advisors who manage or advise on workplace plans, the research suggests two practical steps to consider:

• Offer managed-account options or similar personalized guidance to plan participants, especially if the plan lacks ongoing individualized support.
• Use advisor access, targeted communications, and education to connect participants with those resources and explain the connection between contributions, employer matching, and tax benefits.

Voya Financial Advisors' Alicia Kong noted the research reinforces advisors' roles in helping participants decide how much to save and whether they capture their employer match.

# Bottom line