BERWYN, PA — In an effort to reshape the $13 trillion Individual Retirement Account (IRA) marketplace, Morningstar Investment Management LLC (“Morningstar Retirement”), a subsidiary of investment insights firm Morningstar, Inc. (Nasdaq: MORN), is joining forces with integrated technology provider Envestnet and IRALOGIX, a state-of-the-art wealth management technology platform. This partnership aims to launch a managed accounts service for IRAs, with Matrix, a subsidiary of Broadridge Inc (NYSE: BR), serving as the custodian.
The new offering, expected to launch in the first quarter of 2024, integrates Envestnet’s fund selection and portfolio-building capabilities with Morningstar Retirement’s proprietary managed accounts methodology, investment engine, and digital delivery platform. Packaged within a low-cost IRA serviced by IRALOGIX, the service opens up personalized investment advice to individuals, regardless of their account balance.
IRALOGIX, a leading fintech company in which Morningstar Inc. is an investor, offers fully paperless, white-label IRA record-keeping solutions. This allows financial institutions to customize their IRA offerings seamlessly. The service leverages institutional share classes instead of retail ones, allowing for cost-effective investments while providing personalized advice tailored to each account holder’s profile and circumstances.
Brock Johnson, president of Morningstar Retirement, emphasized the need for innovation in the IRA space. He said, “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.”
The new service uses the same platform that powers Morningstar Retirement’s traditional managed accounts service, which currently provides personalized investment and savings advice to over 2 million participants in employer-sponsored retirement plans. The managed IRA solution allows Envestnet to develop model portfolios based on an asset manager’s proprietary funds.
Sean Murray, Head of Envestnet Workplace Solutions, hailed the partnership as a win for all parties involved. “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,” he said.
This collaborative venture between Morningstar Retirement, Envestnet, and IRALOGIX underscores the growing trend of leveraging technology and partnerships to deliver innovative solutions in the wealth management industry. By providing access to personalized advice and institutionally priced investments, this service promises to redefine the IRA landscape.
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