Investment Services News

Morningstar Investment Management & Envestnet Team Up to Deliver Personalized IRAs

Morningstar Investment Management & Envestnet Team Up to Deliver Personalized IRAs

New Managed Accounts Offering Will Enable Asset Management Firms to Offset High Cost of Administering IRA

The IRA Accounts and Servicing will be Powered by Leading Fintech Company, IRALOGIX

The retirement groups within Morningstar Investment Management LLC (“Morningstar Retirement”), a subsidiary of investing insights firm Morningstar, and Envestnet, a leading provider of integrated technology, intelligent data and wealth solutions, are planning to launch a managed accounts service for Individual Retirement Accounts (IRA) powered by IRALOGIX. This new offering will be custodied by Matrix, a subsidiary of Broadridge Inc (NYSE: BR) and will make it easy for individuals—regardless of account balance—to receive personalized investment advice on their IRAs. It combines Envestnet’s fund selection and model portfolio-building capabilities with Morningstar Retirement’s managed accounts methodology, investment engine, and digital delivery platform.

Expected to launch in the first quarter of 2024, the service will be packaged within an IRA serviced by IRALOGIX, which offers low-cost investments by leveraging institutional share classes rather than retail share classes. Morningstar Investment Management’s platform blends those portfolios to design unique portfolios that are aligned with an account holder’s specific profile and situation. It then manages that portfolio for the account holder, adjusting the investment strategy as the person’s situation and investment objectives evolve. The IRA product(s) will also have no minimum account size requirements, making it easier for those with low balances to gain access to personalized advice. IRALOGIX is a leading fintech company in which Morningstar Inc. is an investor.

“We believe the IRA space is ripe for innovation and personalization,” said Brock Johnson, president of Morningstar Retirement. “Nearly 40 percent of U.S. households own an IRA, yet the vast majority do not have an advisor and will never be able to retain an advisor because their balances are too small. With the help of Envestnet Workplace Solutions and IRALOGIX, we aim to advance access to personalized investment advice and institutionally priced investment options in the IRA space. Every account holder should have access to not only a professionally built investment portfolio, but also one highly configured to their specific needs and objectives.”

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This service uses the same platform that powers Morningstar Retirement’s traditional managed accounts service, which today brings personalized investment and savings advice to more than 2 million participants in employer-sponsored retirement plans. This latest managed account offering allows for Envestnet to develop the fund-level models that serve as the bedrock for the portfolio-building process within the IRA service.

“This service is a very powerful collaboration that we believe will give asset managers, broker-dealers, recordkeepers, and advisors options to shift the growing cost of administering their IRA programs to a private-labeled offering, while still retaining their existing revenue streams,” said Sean Murray, Head of Envestnet Workplace Solutions. “It is a win for investors. It is a win for asset managers. And it is a win for the wealth and retirement industry.”

The managed IRA solution enables Envestnet to develop model portfolios based on an asset manager’s underlying proprietary funds and delivered through Morningstar Retirement’s managed accounts service.

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