CHICAGO, Nov. 12, 2014 /PRNewswire/ -- NextCapital is pleased to announce that a defined contribution plan advisory firm has used NextCapital's digital advice solution, combined with Russell's Adaptive Investing™ methodology, to re-enroll its own 401(k) plan and now offers the solution to all its plan sponsor clients.
NextCapital's digital advice solution enables Russell's Adaptive Retirement Accounts (ARA) to personalize and automate investment management for retirement savers and provide a retirement plan that is regularly updated.
The personalized plan also integrates features such as auto-escalation savings to help employees achieve their target income in retirement. Plan advisers may offer the NextCapital/ARA solution to all their plan sponsors to provide personalized portfolio management and planning to all employees. Re-enrollment of all employees into the solution is possible because it qualifies as a Qualified Default Investment Alternative (QDIA).
"Target date funds have been the runaway default used by the industry to approximate a prudent portfolio for each investor, but we can do better with more personalized investing and planning. Today truly personal portfolio management is obtainable for all DC participants for about the same cost as a TDF. This is a breakthrough for the 70 million Americans who rely on a 401(k) to save for retirement," says John Patterson, CEO of NextCapital.
Despite the inherent limitations of TDFs, nearly $700 billion of DC retirement assets are invested in "one-size-fits-all" TDFs. According to the Investment Company Institute, 40 percent of new 401(k) savers use TDFs today, up from 19 percent in 2006.
ARA portfolios, utilizing NextCapital technology, are constructed by analyzing each participant's age, salary, account balance, projected Social Security and Russell's capital market assumptions. ARA creates each participant's custom portfolio using the DC plan's current fund lineup. In addition to automated portfolio construction, rebalancing and periodic re-evaluation for each participant, ARA provides a personalized plan to show participants if they are on-track for retirement and suggested steps to correct shortfalls.
"Advisers play a critical role in the $6.6 trillion defined contribution market. NextCapital's solution is ideal for advisers looking to enhance their offering and extend personalized advice across their client base. It offers the adviser and their clients a superior QDIA-ready alternative to target date funds," said Dirk Quayle, President of NextCapital.
NextCapital's open-architecture advice engine enables world-class advice providers, such as Russell Investments, to gain entry to and deliver scalable advice to the $6.6 trillion defined contribution market.
About NextCapital Group
Our mission is to help investors build and manage personal, objective and affordable world-class investment portfolios. NextCapital is a leading provider of 401(k) managed accounts services and investor portfolio management solutions. NextCapital works with media and financial partners including the Wall Street Journal Digital Network, Transamerica and Russell Investments. The NextCapital founders created the first 401(k) managed accounts platform, the first electronic financial adviser and one of the first online banks. NextCapital is headquartered in Chicago, IL. For more information, visit www.NextCapital.com.
SOURCE NextCapital Group