Americas Best TAMPS 2024 - 11

2024 AMERICA'S BEST TAMPS
tech stacks, which may bring greater
efficiency to your back-office operations
and compliance workflows.
You may even find TAMPs reduce
investment expenses for your clients.
Even when combining the TAMP's own
platform fee and the management fees
for each SMA or model manager, the
total may be less than the combined
expense ratios your clients would pay
for a portfolio of actively managed
mutual funds.
THE RIGHT FIT FOR
YOUR CAREER
Every advisory practice needs a process
manual for succession purposes, if
nothing else. As you discuss a potential
relationship with any TAMP, share your
manual and let them find efficiencies
their technology can unlock-tasks to
be automated, cost centers to eliminate.
You can then redeploy those resources
to expand your capacity or bring on new
capabilities in areas the TAMP doesn't
support. After that, the ROI flows.
If you've developed a proprietary
process, don't worry-the TAMP isn't
interested in stealing it. In the best-case
scenario, you'll be set up to sell your
expertise to other advisors and generate
revenues that way. One way or another,
full disclosure is better.
A BETTER WRAP FOR CLIENT
AND ADVISOR ALIKE
The first victim of the client-centric
TAMP model may be the actively
managed mutual fund wrap account,
with its relatively high level of embedded
fees and rigid asset class limitations.
Associated higher-than-average
fees lower the likelihood of positive
investment returns for clients. With
fewer clients and advisors using mutual
funds, mutual fund wraps may decline.
Instead, the ETF wrap account is likely
to grow as the preferred basic model,
using passive ETFs tied to legitimate
indices. A few actively managed funds,
like emerging international or highyield
bond funds, will remain in wrap
accounts in lieu of ETFs, but the vast
majority of wrap accounts will hold
primarily ETFs.
In the same way, SMAs are giving
way to UMAs-especially modelsbased
UMAs, where the money
manager downloads models instead
of conducting trades. Each manager's
portfolio will have a separate sleeve and
overlay tools with managers used for tax
and trading efficiency.
This ability to develop tax efficiency,
sometimes known as " tax alpha " (tax
benefits above and beyond a normal
market return), will become a key
differentiator. Firms that can't generate
and prove better returns through active
tax management will struggle.
Some advisors currently insist on
managing a single proprietary sleeve
and selecting individual securities-this
is how they demonstrate their worth
to clients, or so they believe. " Live by
performance, die by performance " is
dangerous for both the advisor and
the client. Compliance in the future
may greatly limit these " rep as advisor "
sleeves.
JOIN THE FINTECH
REVOLUTION
Robot investment platforms have had
their most significant success with mass
affluent investors (at best) who rarely
have appreciable assets or financial
goals beyond allocating to retirement
accounts.
TM
True high-net-worth households have
remained aloof from the robo revolution
for two reasons. First, they recognize
the value of a flesh-and-blood advisor.
And second, they're willing to pay a
reasonable fee in exchange for that
added value.
But the downstream effect of this is that
advisors are still competing viciously
with each other for accounts, and those
who fail to provide world-class service
are struggling to retain relationships in
the face of innovative and aggressive
rivals. " Good enough " is no longer
good enough to stay relevant in an
environment where retail investors are
constantly weighing their outcomes
against real and imaginary benchmarks.
If robo is efficient, and the human touch
is attractive, then why not combine the
two? Put the advisor in front of wealthy
humans, making the case for placing
funds into their care. If you're like most
readers of The Wealth Advisor, that
person-to-person networking is what
you do best-and you definitely do it
better than a website.
Meanwhile, the robo handles everything
else, running ceaselessly in the
background. In theory, a TAMP can run
every aspect of the wealth management
cycle except for the person-to-person
communications that differentiate every
advisor as an individual.
Fintech is as hot as it gets. All it takes
to get a VC's checkbook open is an
entrepreneurial spirit, a business plan, and
a vision that applies technology to financial
services. As the era of robo-advisors and
automated portfolio construction tools
progresses, the wall between finance and
tech softens every day.
Until now you may have considered
yourself a pure service professional,
11
Americas Best TAMPS 2024

Table of Contents for the Digital Edition of Americas Best TAMPS 2024
