Morningstar Retirement Manager feedback

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Taz
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Morningstar Retirement Manager feedback

Post by Taz » Fri Jun 14, 2019 6:25 am

Greetings. Our new company 401(k) plan, Vanguard managed by Ascensus, includes Morningstar Retirement Manager - purely a robo-advisor product. Two options with the portfolio recommendation feature: 1) Managed by You which is free, and 2) Managed by Morningstar which costs 0.35% annually.

There are 4-5 threads mentioning availability in someone's 401(k) plan but no feedback on its portfolio design recommendations or how the managed option works in real life. The client rep clarified that if you select the Managed by Morningstar option it automatically implements the generated portfolio -- no tweaking on your part unless you fudge the entering assumptions and outside investments.

Since I'm the one briefing the rest of the employees during the changeover process, I'd really appreciate any firsthand comments. :)

Taz
The destination matters.

dbr
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Re: Morningstar Retirement Manager feedback

Post by dbr » Fri Jun 14, 2019 10:31 am

I would be a little concerned about your fiduciary liability if you are advising people in the plan and have to ask here for advice yourself. Are you part of management or company ownership and have a fiduciary position? Who in the company engaged this provider without knowing the details of the plan they are contracting? How did you get stuck with a responsibility to brief the employees?

Otherwise I suspect that the options are there for employees to make their own choice and the issue would be are Ascensus and Morningstar providing the employees with the documentation they need to explain how the plan works. It might be the client rep should be the person to provide a briefing on the advisory option vs the unadvised option.

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Taz
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Re: Morningstar Retirement Manager feedback

Post by Taz » Fri Jun 14, 2019 5:07 pm

dbr,

I am part of management and led the search committee which advised the CEO who made the decision. As co-plan administrator, I do the grunt work and do know the details of the plan. Neither I nor the company are advising ANYONE on what to select or whether to chose a particular option, but on the mechanics of the 401(k) plan features such as eligibility, loans, transfers, safe harbor matches, deadlines, etc. Ascensus provides all of the briefing and disclosure material. That material includes a Ascensus/Morningstar walk through of the actual process and what screens they will see. Morningstar assumes the role of fiduciary for those who chose their recommendations.

As far as why I asked? Primarily because I'm curious about the experiences of those folks here who have used the tool. I have no qualms reminding employees that they need to do their own due diligence on a service that will recommend and then execute an asset allocation and to contact Morningstar if they have questions on the methodology of their algorithm.

Personally, I am not going to use the managed option because I am DIY Vanguard/TSP 60/40 guy with a mild SCV/MC tilt. :)
The destination matters.

dbr
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Re: Morningstar Retirement Manager feedback

Post by dbr » Sat Jun 15, 2019 7:57 am

It will be interesting to see if anyone turns up who has experience with this tool.

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Taz
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Re: Morningstar Retirement Manager feedback

Post by Taz » Sat Jun 15, 2019 9:07 am

Apparently it has been around for awhile. I've done internet searches and it is/was offered in a number of plans. Here's a few:

Farm Credit Foundation
City of Atlanta
State of Nevada
State of Hawaii
Univ of North Texas

dbr - I'm sorry if I came across a bit defensive as your comments were spot-on as to the care individuals and companies need to take when dealing with these matters. Our plan is a participant directed plan with the company acting as a fiduciary under ERISA 404(c). The plan design is incredibly pro-employee compared to the current one. All Vanguard (due to our size); institutional target date funds; all admiral so no expense sharing/refunds; all but a couple of funds are index; no employee fees unless they choose the brokerage option, or take a loan, etc..

Cheers - Larry
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dbr
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Re: Morningstar Retirement Manager feedback

Post by dbr » Sat Jun 15, 2019 9:14 am

Taz wrote:
Sat Jun 15, 2019 9:07 am
Apparently it has been around for awhile. I've done internet searches and it is/was offered in a number of plans. Here's a few:

Farm Credit Foundation
City of Atlanta
State of Nevada
State of Hawaii
Univ of North Texas

dbr - I'm sorry if I came across a bit defensive as your comments were spot-on as to the care individuals and companies need to take when dealing with these matters. Our plan is a participant directed plan with the company acting as a fiduciary under ERISA 404(c). The plan design is incredibly pro-employee compared to the current one. All Vanguard (due to our size); institutional target date funds; all admiral so no expense sharing/refunds; all but a couple of funds are index; no employee fees unless they choose the brokerage option, or take a loan, etc..

Cheers - Larry
Sounds like you are doing the right thing. Sorry I don't have experience with that particular managed plan.

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