T. ROWE PRICE LAUNCHES PERSONALIZED RETIREMENT MANAGER, AN INDUSTRY FIRST

Rhea-AI Summary

T. Rowe Price has launched Personalized Retirement Manager (PRM), an innovative service that combines target date asset allocation with full personalization to enhance retirement outcomes. PRM uses personal data to create tailored asset allocations for individuals, adjusting throughout their retirement savings journey. It can be selected as a Qualified Default Investment Alternative (QDIA) for 401(k) participants.

Key features of PRM include:

• Uses recordkeeping data and optional additional information for personalization
• Designed by T. Rowe Price's target date solutions team
• Comparable pricing to existing target date solutions
• Already in use by several clients for participants nearing retirement

The launch aligns with growing interest in personalization among plan sponsors, with 14% currently offering dynamic QDIA solutions and 51% considering or exploring them.

Positive

• Launch of innovative Personalized Retirement Manager (PRM) service
• PRM can be selected as a Qualified Default Investment Alternative (QDIA)
• Designed by the same team behind T. Rowe Price's successful target date solutions
• Comparable pricing to existing target date solutions
• Already being used by several T. Rowe Price recordkeeping clients
• Growing interest in personalization among plan sponsors (14% offering, 51% considering)

Negative

• None.

Insights

Financial Analyst

T. Rowe Price's launch of Personalized Retirement Manager (PRM) represents a significant innovation in the retirement savings industry. By combining target date strategies with personalization, PRM addresses a growing market demand and potentially enhances T. Rowe Price's competitive position.

The service's ability to be selected as a Qualified Default Investment Alternative (QDIA) could drive increased adoption and assets under management. With $464 billion already in target date portfolios, even a small shift to PRM could substantially impact T. Rowe Price's revenue.

However, the impact on profitability remains unclear, as the article mentions "comparable pricing" to existing solutions. The success of PRM will likely depend on its ability to deliver superior outcomes and attract new clients, rather than immediate margin expansion.

Market Research Analyst

The launch of PRM aligns with key market trends in the retirement industry. With 98% of T. Rowe Price's defined contribution clients already offering target date products, PRM provides a differentiated offering in a saturated market.

The survey data showing 14% of DC plan sponsors currently offering dynamic QDIAs, with another 51% considering or exploring them, indicates a substantial growth opportunity for PRM. This suggests a potential first-mover advantage for T. Rowe Price in capturing market share in this emerging segment.

The focus on personalization for near-retirees addresses the growing disparity in retirement savings among DC plan participants, potentially positioning T. Rowe Price as a leader in addressing retirement inequality. This could enhance the company's reputation and appeal to socially conscious investors and plan sponsors.

Firm combines its identical, underlying target date asset allocation methodology with full personalization to help drive better retirement outcomes

BALTIMORE, Sept. 10, 2024 /PRNewswire/ -- T. Rowe Price, a global investment management firm and a leader in retirement, continues the evolution of its target date offering with the launch of Personalized Retirement Manager (PRM), a service that uses personal data to create a unique asset allocation tailored to an individual's specific savings goals, preferences, and financial situation to help drive better retirement outcomes. The fully personalized glide path continues to adjust throughout a participant's retirement savings journey.

PRM can be selected as the Qualified Default Investment Alternative (QDIA) for participants and uses personal information available through 401(k) recordkeeping data, such as account balance, contribution rate, and income. Participants can then choose to add additional information—retirement goals, a spouse or partner's assets, household assets outside the plan, and other relevant factors—to further refine their asset allocation. Participants have the flexibility to engage as little or as much as they like; and the more they engage, the more personalized their experience will be.

The service is proprietary to the firm and was designed by the same professionals behind T. Rowe Price's target date solutions, using identical underlying strategies, allowing clients to add personalization within a familiar investment framework and with comparable pricing. PRM is already being used as a QDIA by several T. Rowe Price recordkeeping clients for participants nearing retirement. The firm also intends to evolve the platform to incorporate retirement income advice in the future.

"With advances in technology, leveraging personal data to build customized asset allocation is the future of target date solutions," said Wyatt Lee, head of Target Date Strategies at T. Rowe Price, whose team manages $464 billion in target date portfolios as of July 31, 2024. "Personalized Retirement Manager is a significant addition to our target date offering because it is the first proprietary service of its kind. From the underlying analytical engine to the portfolio construction and investment building blocks, we built PRM based on the same research and asset allocation methodology as our Morningstar Gold Rated target date strategies. As a leader in the retirement industry, we consistently strive to be at the forefront of retirement innovation to offer choice and flexibility to help fuel better retirement outcomes. Saving for retirement no longer has to be a choice between target date solutions or personalization—it can be both."

T. Rowe Price's latest white paper further analyzes the impact of personalization and the growing desire for it among plan sponsors. Key findings from the paper include:

• Target Date products are ubiquitous in the retirement savings landscape. According to T. Rowe Price's annual 401(k) benchmarking report, 98% of the firm's defined contribution recordkeeping clients offered them in 2023. PRM allows plan sponsors the opportunity to continue offering target date solutions and incorporate personalization as an additional and complementary lever to improve retirement outcomes.
• There is a growing interest in personalization from plan sponsors. A recent T. Rowe Price survey found that 14% of Defined Contribution (DC) plan sponsors currently offer dynamic QDIA solutions that transition participants from a traditional target date investment to a more personalized strategy as they near retirement. Another 51% are either actively considering or interested in exploring dynamic QDIAs.
• Implementing in-plan personalization gives plan sponsors the ability to serve a more diverse set of plan participant journeys. T. Rowe Price's analysis of the 2022 Federal Reserve's Survey of Consumer Finances found that retirement savings disparities grow over time among those who are currently participating in a DC plan. This disparity is most evident when nearing retirement age. This finding supports the use of a dynamic QDIA structure to facilitate the introduction of personalization at a time when it is likely to have the greatest impact on an individual's optimal outcomes.

"We observe growing demand for personalized solutions in the industry," said Jessica Sclafani, global retirement strategist at T. Rowe Price and author of the white paper. "While target date solutions and personalization typically exist separately, Personalized Retirement Manager combines the two, offering T. Rowe Price's trusted target date methodology alongside the power of personalization. Our goal is to help participants feel more confident that their investments are aligned to their unique circumstances and long-term goals."

ABOUT T. ROWE PRICE

Founded in 1937, T. Rowe Price (NASDAQ – GS: TROW) helps individuals and institutions around the world achieve their long-term investment goals. As a large global asset management company known for investment excellence, retirement leadership, and independent proprietary research, the firm is built on a culture of integrity that puts client interests first. Clients rely on the award-winning firm for its retirement expertise and active management of equity, fixed income, alternatives, and multi-asset investment capabilities. T. Rowe Price serves millions of clients globally and manages US $1.59 trillion in assets under management as of July 31, 2024. About two-thirds of the assets under management are retirement-related. News and other updates can be found on Facebook, Instagram, LinkedIn, X, YouTube, and troweprice.com/newsroom.

View original content:https://www.prnewswire.com/news-releases/t-rowe-price-launches-personalized-retirement-manager-an-industry-first-302243795.html

SOURCE T. Rowe Price Group

FAQ

What is T. Rowe Price's Personalized Retirement Manager (PRM) and how does it work?

T. Rowe Price's Personalized Retirement Manager (PRM) is a service that creates unique asset allocations tailored to an individual's specific savings goals, preferences, and financial situation. It uses personal data from 401(k) recordkeeping and optional additional information to personalize and adjust the investment strategy throughout a participant's retirement savings journey.

Can T. Rowe Price's PRM be used as a Qualified Default Investment Alternative (QDIA) for 401(k) plans?

Yes, T. Rowe Price's Personalized Retirement Manager (PRM) can be selected as the Qualified Default Investment Alternative (QDIA) for 401(k) plan participants.

How does the pricing of T. Rowe Price's PRM compare to traditional target date funds?

T. Rowe Price's Personalized Retirement Manager (PRM) is offered with comparable pricing to their existing target date solutions, making it a cost-effective option for personalized retirement planning.

What percentage of plan sponsors are interested in dynamic QDIA solutions like T. Rowe Price's PRM (TROW)?

According to T. Rowe Price's survey, 14% of Defined Contribution (DC) plan sponsors currently offer dynamic QDIA solutions, while an additional 51% are either actively considering or interested in exploring such solutions.