Many agents and advisors haven’t heard of turnkey asset management platforms (TAMPs). And, unbeknownst to some investment advisor representatives in larger firms, they unknowingly have limited exposure to a TAMP. Have you been exposed? Do you know what a TAMP can do for independent advisors? Let’s discuss …
TAMPs Create Efficiencies
TAMPs* provide advisors a complete investment management program and platform throughout their firm. It assists with investment selection and management, allowing advisors to offload non-revenue-driving back-office functions. It can help firms facilitate manager due diligence, investment research, portfolio construction/rebalancing, reconciliation, performance reporting, tax optimization and statement preparation. The beauty of that is advisors have more time to focus on gathering assets, servicing existing accounts and acquiring new clients.
TAMPs Support Fee-Based Advisors
TAMPs constitute fee-based account relationships and as “turnkey” implies, many can be implemented in as little as 90 days. It’s not without effort, however, the efficiencies alone can free up resources for M&A or enhancing other revenue streams. Here’s how TAMPs generally operate across one or more of the four primary types of outsourced portfolio solutions:
- ETF wrap accounts.
- Separately managed accounts.
- Unified managed accounts.
- Unified managed households.
All of the above provide benefits and opportunities to wealth firms, and choosing the right TAMP is vital to future success. Based on the type of investments offered, the asset management firm’s responsibilities and the added capabilities of overlay and cost, there are multiple variations to choose from. It’s important to find the right partnership and platform that can provide your firm with a competitive advantage, flexibility to meet your firm’s needs and grow along with your firm with scalable services. Here are the variations you’ll find:
Exchange-Traded Funds (ETF) Wrap Accounts. An ETF wrap is a type of managed account where the client’s investment portfolio is invested solely in exchange-traded funds. The selection and composition of each ETF class is based on the appropriate asset allocation model, and is periodically assessed to respond to market changes. As with most managed accounts, there is an asset-based fee charged for the account; the advisor pays transaction costs. ETF wraps often have lower expense ratios than mutual fund wraps and offer intraday trading, tax efficiency and other benefits.
Separately Managed Accounts (SMA). A SMA is made up of a portfolio of individual securities managed by a single asset manager in a particular type of style and offered to investors by a sponsoring firm. A fee-based SMA program utilizes multiple SMAs. A single SMA can also form a single sleeve within a UMA structure. In general the SMA approach differs from a mutual fund because investors directly own the securities—individual bonds, for example—instead of owning a share in a pool of securities.
Unified Managed Accounts (UMA). A UMA is a single fee-based account that houses numerous investment products within multiple separate account sleeves. Management between sleeves is determined by the overlay process to gain tax and trading efficiencies. This necessitates the advisor managing the client relationship on a platform optimized for UMAs. Traditionally, UMAs have a single custodian, although some platforms provide aggregation across multiple custodians.
Unified Managed Households (UMH). A UMH is similar to a UMA, however, it provides a more powerful global approach for investors and their household. It aggregates an investor’s household wealth, not just individually accessing each investor, but UMH platforms enables advisors to take a holistic approach to their investors’ total portfolio and apply a range of solutions that manage wealth in a manner similar to a chief financial officer (CFO). Advisors use UMHs like a CFO reviews the overarching financials of a company or family endowment. Managed assets include qualified and non-qualified accounts, as well as alternative investments, real estate, collectibles, oil and gas properties, limited partnerships and managed futures accounts. A UMH has a single registration, and can aggregate across multiple custodians. Many advisors consider the UMH to be the ultimate advancement in the managed-account space.
So, What Can a TAMP Do for You?
Let’s see. Whether you’re considering taking your Series 65 or deeply rooted in advisory services. Talk to the ChangePath sales team and see if they can help you focus more heavily on revenue-driving activities and free up your time to better serve clients.
What are you waiting for? Let’s see what a TAMP can do for you. Call us today at 888.798.2360.
*Information courtesy of Trust Advisor’s 2017 America’s Best TAMPs.