Morningstar Introduces Next-Generation Defined Contribution Participant Advice and Managed Accounts Platform

Retirement Manager offers individualized, tax-efficient retirement drawdown strategy, enhanced liability-driven portfolio methodology, and more holistic advice

May 06, 2013, 10:39 ET from Morningstar, Inc.

CHICAGO, May 6, 2013 /PRNewswire/ -- Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, has announced the next generation of Morningstar® Retirement ManagerSM, an advice and managed account service for defined contribution participants in the United States. Together, Morningstar's registered investment advisory subsidiaries are the largest providers of managed accounts, serving more than 800,000 participants.

"Planning for retirement is extremely complex. Multiple accounts, income streams, expenses, funding goals, and the unpredictability of the market can overwhelm even the most seasoned investors. Participants need a solution that's sophisticated enough to account for these variables while delivering an actionable, easy-to-understand plan," Brock Johnson, president of retirement solutions for Morningstar, said. "The newest version of Morningstar Retirement Manager brings together our latest institutional asset allocation methodologies, forecasting and fund selection techniques, design, and technology to help people better prepare for a successful retirement."

The new version of the service combines the best features of the original Retirement Manager with the Advice by Ibbotson methodology. Among the most significant enhancements is the addition of Income Secure, a program that provides individualized, tax-efficient retirement income drawdown advice. A Morningstar research paper, "Alpha, Beta, and Now...Gamma," shows that a participant's withdrawal strategy—how much to take from a retirement portfolio each year and from which account (IRA, 401(k), taxable, etc.)—can have the most significant effect on the amount of income an investor has in retirement. Retirement Manager evaluates all of a participant's holdings across both taxable and tax-deferred accounts and provides a participant with a specific, individualized drawdown plan that outlines how much a participant can pull from each account each year, considering taxes and minimum required distributions.

Retirement Manager also offers enhanced investment recommendations that reflect the latest liability-driven investment methodology. Liability-driven investing recognizes that investors in or nearing retirement face different risks than those in the accumulation phase. For example, two investors may have the same stock-bond split in their portfolios, but the investor closer to retirement has greater need for inflation, currency, and interest rate protection than someone further from retirement. Participants who use Retirement Manager will continue to get investment recommendations that are suited to their risk capacity, but now they will also be more sensitive to the unique risks associated with their life stage.

Another significant enhancement is more holistic retirement planning advice that suggests what age to retire in order to help participants meet their goals. In addition, if a participant is not saving enough and has reached the annual 401(k) savings limit, Retirement Manager will provide participants with asset allocation and savings recommendations for an outside taxable account.

Additional enhancements to Retirement Manager include:

  • Portfolio assignment based on patented human capital methodology, which accounts for an investor's total economic situation—both current wealth and future earnings and savings potential;
  • Enhancements to fund selection methodology, inflation rate forecasting, and treatment of stable value funds;
  • Personalized allocation recommendations for guaranteed income products, both in and out of plan.

In addition to providing defined contribution managed accounts and advice, Morningstar offers plan sponsor investment lineup selection, 3(21) and 3(38) fiduciary services, and custom target-date fund design through its registered investment advisors.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individuals, financial advisors, and institutions. Morningstar provides data on approximately 422,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 9 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its registered investment advisor subsidiaries and has approximately $157 billion in assets under advisement and management as of March 31, 2013. The company has operations in 27 countries.

The Morningstar Investment Management division is a division of Morningstar and includes Morningstar Associates, Ibbotson Associates, and Morningstar Investment Services, which are registered investment advisors and wholly owned subsidiaries of Morningstar, Inc. All investment advisory services described herein are provided by one or more of the U.S. registered investment advisor subsidiaries.

Morningstar® Retirement ManagerSM is offered by and is the property of Morningstar Associates, LLC, a registered investment advisor and wholly owned subsidiary of Morningstar, Inc., and is intended for citizens or legal residents of the United States or its territories. Together, Morningstar Associates and Ibbotson Associates are the largest provider of managed accounts by participants served according to PLANSPONSOR Magazine's Managed Accounts Buyer's Guide 2012.

©2013 Morningstar Inc.  All rights reserved.


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SOURCE Morningstar, Inc.