The potential value that managed account providers bring—including personalized guidance, holistic planning, dynamic rebalancing, and tax-aware portfolio management—has rarely been in question. The primary critique has always been about their added expenses relative to target-date funds, which have offered a reasonable, if highly imperfect, solution at a much lower cost.

However, a combination of intense competition, technological advancements that improve the efficiency of delivery, and other market factors has driven these expenses down meaningfully over time, particularly for the very large plans. As the cost difference between managed accounts and target-date funds has become much more negligible, especially for mega plans, the value proposition for managed accounts has grown meaningfully.

This shift allows mega defined contribution plan sponsors with substantial assets to deliver institutional-quality investment management and financial advice to participants at significantly reduced costs. These large-scale plans—spanning 401(k), 403(b), and 457 platforms—leverage their substantial bargaining power to negotiate managed account fees that reframe the traditional cost-benefit equation for their participants.