Our portfolio company NextCapital is busy bringing the personalization of a managed account to the $700 billion defined contribution target day fund market. Russell and Transamerica are the first to bite.
The software delivers a highly tailored portfolio design, even to the most detached participant, by mining for all of a participant’s available data through their plan recordkeepers. Age, savings habits, income, account balances and projected Social Security benefits are all factored in, as are assets in a participant’s defined benefit accounts, should they exist. Retirement plan providers that adopt NextCapital’s technology can then inject their own investment theology – their preferred allocations, products, risk assessments and so on – to make it their own. Russell alone has more than 2,400 institutional clients around the world, so the potential for NextCapital’s ARA approach to catch on would seem to be fairly good.