As retirement plans evolve, so do the default investment options offered to participants. Target date funds still dominate the market, but attention is shifting toward managed accounts for their ability to deliver more personalized outcomes. At a recent TPSU program at Rice University in Houston, Fred Barstein, CEO and founder of TPSU and 401kTV, spoke with Rich Eagar of Prime Capital about what this shift means for plan sponsors and fiduciaries.
Eagar explained that while target date funds hold more than $4 trillion in assets, managed accounts are gaining traction because they use a broader set of data points—such as savings rates, account balances, payroll information, and even geographic preferences—to customize investment strategies. This personalization becomes especially valuable as participants near retirement, when two people of the same age may have very different financial situations.
Still, Eagar cautioned that managed accounts come with trade-offs. They introduce additional costs and require plan sponsors to perform thorough fiduciary due diligence before selecting them as a default. The key, he emphasized, is weighing whether the added personalization truly benefits participants and aligns with fiduciary obligations.
Read the Full Transcript Here:
Fred Barstein:
Greetings. My name is Fred Barstein. I’m CEO and founder of TPSU and 401kTV. And I am here on the campus of Rice University in Houston, where we just completed a TPSU program here with Rich Eagar?
Rich Eagar:
Correct.
Fred Barstein:
I got it right, who is a part of Prime Capital. So welcome, Rich.
Rich Eagar:
Thank you.
Fred Barstein:
Okay if we ask you a few questions?
Rich Eagar:
Absolutely.
Fred Barstein:
So before we do, tell us a little bit about your firm and your role.
Rich Eagar:
Yeah, so work with Prime Capital Financial in Houston. Here we focus particularly on retirement plans of all shapes and sizes, certainly with qualified and non-qualified DBs and DCs and everything in between. My focus in particular and where I specialize in is mainly on the investment side of the equation, helping plan sponsors and fiduciaries understand what their responsibilities and what their processes should be when it comes to the investments in the plan.
Fred Barstein:
So with that, certainly the most popular default option is target dated funds, which as of 2025 is over $4 trillion. And we’re starting to see more and more talk about managed accounts. So should a plan sponsor consider it? What’s the upside and what’s the downside of having a managed account as their default option?
Rich Eagar:
Absolutely. And there’s hybrid options as well, different ways of incorporating managed accounts. I think the positive is asking the question. Anytime you get more information as a fiduciary with something new, doesn’t necessarily mean it has to be done, but it shows good and proper due diligence that you’re considering other alternatives.
On the positive side with managed accounts we’re considering, as you’d mentioned, target date funds are vastly superior in terms of the breadth of that they cover from a dominant standpoint in the marketplace from a default perspective. But managed accounts have come about really because they can be a little bit more personalized for employees. They’re considering a lot more data points on a default basis than a target date fund, is looking purely at how long do you have until retirement. Managed accounts considered just automatically up to 14, 15 different data points for every individual. And as we get closer into retirement, that can be a lot more significant because, as we know, two individuals that are the same age may be a wildly different financial situations.
Fred Barstein:
Sure. But if it’s a default and you’re not getting engagement, how do you get the data?
Rich Eagar:
A lot is being fed automatically through payroll, right?
Fred Barstein:
Through payroll.
Rich Eagar:
The census files that are being fed to providers will be automatically included. Things like your current balance. Yes, how long you have until retirement, but also things like your gender, where you want to retire, your current savings rate, how much do you have saved in. As well as additional opportunities where people can input other outside assets or additional information to make it even more customizable for them.
Fred Barstein:
Or even the match.
Rich Eagar:
Right.
Fred Barstein:
So what’s the downside of using a managed account?
Rich Eagar:
One, it’s different. Anytime you look at something new that requires a bit of due diligence, you always have that fiduciary obligation to do your thorough due diligence to make sure it’s a proper fit in the best interest of employees and their beneficiaries. There’s also costs to manage accounts as well. And that service fee comes to actually having a fiduciary oversee that outset allocation for employees in that default structure.
Fred Barstein:
Above and beyond a targeted date?
Rich Eagar:
Correct.
Fred Barstein:
Yeah. Great. Well, final question, TPSU, this first program as an adjunct lecturer, what was your impression of TPSU and what goes on here?
Rich Eagar:
Yeah, I thought it was a great way to come get further education into an ever evolving topic that is being a fiduciary to a retirement plan. Some of the things that stood out to me were just the breadth of topics that were covered. Fiduciary education can cover lots of different areas, even in things that are maybe not fiduciary decisions such as plan design. We spent a lot of good time in there today saying, “What does the ideal plan look like?” What can I take back to my committee and maybe charge them a little bit with some ideas or new things that I heard, whether it be design, investments. Or just someone that I spoke with, the networking opportunities that people had here and speaking with their peers and just asking the simple question of, “Well, what are you doing?” And, “Here’s a struggle that I’ve had. Have you addressed that some way that I could maybe learn from and implement in my own company?”
Fred Barstein:
Right, the peer to peer. Well, thanks for your time. Thanks for being a lecturer.
Rich Eagar:
Oh, my pleasure.
Fred Barstein:
And thank you for watching 401kTV. Please stay tuned and look for a TPSU program near you.
