The Impact of Managed Accounts on Participant Savings and Investment Decisions

Due to limitations on the audience investment advisers like Morningstar Investment Management LLC can provide hypothetical performance to, this paper is intended for Financial Professionals, Institutional Investors, and Sophisticated Plan Sponsors only. It may not be accessed by, shown to, shared with, or provided to any other person, including plan participants, plan sponsors that do not meet the definition of a "Sophisticated Plan Sponsor", retail investors, or the general public.

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Definitions:

Financial professionals are defined as any member of a securities-related self-regulated organization or registered person of such a member, including, but not limited to:

• investment advisers,
• members of
  • national securities exchanges,
  • FINRA,
  • securities future product exchanges,
  • securities futures associations,
  • registered clearing agencies,
  • municipal securities organizations, and
  • nationally recognized statistical ratings organizations, and
• financial service providers and their employees, including, but not limited to, retirement plan recordkeepers.

Institutional investors are defined as:

• Any person described in FINRA Rule 4512(c):
  • Banks, savings and loan associations, insurance companies, and registered investment companies,
  • Investment advisers registered with the SEC or a state securities commission (or any agency or office performing like functions), and
  • Persons (whether a natural person, corporation, partnership, trust, or otherwise) with total assets of at least $50 million,
• Any governmental entity or subdivision thereof,
• Any employee benefit plan, or multiple employee benefit plans offered to employees of the same employer, that meet the requirements of Section 403(b) or Section 457 of the Internal Revenue Code and in the aggregate have at least 100 participants, but does not include any participant of such plans,
• Any qualified plan, as defined in Section 3(a)(12)(C) of the Exchange Act, or multiple qualified plans offered to employees of the same employer, that in the aggregate have at least 100 participants, but does not include any participant of such plans, and
• Any person acting solely on behalf of any such institutional investor.

A sophisticated plan sponsor includes sponsors of plans that fall under the definition of institutional investor plus:

• Any employee benefit plan, multiple employee benefit plan offered to employees of the same employer, qualified plan, or multiple qualified plan offered to employees of the same employer with a knowledgeable person or persons who guides the decisions of the plan and who has access to the tools necessary to analyze hypothetical performance. Knowledgeable persons include:
  • Financial professionals or
  • Consultants/investment committees with experience offering recommendations or making investment decisions for the plan.