Americas Best TAMPS 2024 - 14

2024 AMERICA'S BEST TAMPS
technologies allow advisors to assemble
the clients' information, goals and plans
into a user-friendly platform.
TOTAL FEE TRANSPARENCY
AT LAST
For too many retail investors, the fee
charged for managed accounts remains
a black box. The industry must move
beyond a single, unexplained rate to
at least three distinct fee components
as managed money platforms and
products are adopted.
The product fee is the institutional rate
charged to the firm for the mutual fund,
ETF or managed portfolio. In the case of
a UMA, it should be just the managers'
models without the associated trading
costs.
* For ETFs, product fees may range
from 10 basis points (bps) for large
cap to 25 bps for smaller indices.
* For UMAs, the range for models
should cost between 35 and 50 bps,
depending on the asset class.
The firm's fee reflects the true costs of
providing the managed money platform,
trading, custody, statement preparation
and other definable costs. It should
include both the markup to the firm and
the advisor's compensation tied to the
account.
On top of these TAMP-based fees,
other services such as financial planning
should be billed separately. ETF wrap
fee maximums should be less than
150 bps for smaller accounts. UMAs
that serve larger accounts with more
complex portfolios should fall between
100 and 175 bps, depending on the use
of models and type of overlay services
provided.
Transparency in pricing will take us a
long way toward improving the number
of clients selecting managed money as
the best practice in wealth management.
Using automated solutions where
possible should decrease fees and
account minimums. This will spread
managed accounts to those most in
need of relief from poor products and
high fees: the mass affluent.
Managed accounts alone cannot solve
the retirement crisis, but lower overall
fees can increase balances significantly
over a 30+ year accumulation horizon.
Minimums for ETF wraps are pushing
the lower limit below $25,000.
Some TAMPs will also establish " no
minimums " for retirement accounts like
401(k)s and IRAs, which are expected
to grow substantially over time. If the
industry follows through on this strategy,
managed products and the firms that
provide them may be able to displace the
current dominance of mutual fund firms
in the retirement investment industry.
Best-practice TAMPs also help their
advisors and firms optimize use of the
platform. As TAMPs greatly enhance
advisor and firm productivity, platform
providers need to take the lead in
making sure everyone gets the most
from the platforms.
PICK YOUR PLATFORM
When it comes to the final choice of
selecting a TAMP partner, it simply comes
down to the capabilities a firm values
most. TAMPs today are quite flexible; few
force a firm into a single way of doing
business. The firm selects its strategy and
the TAMP selection process follows.
The largest players continue to be
Envestnet and AssetMark, with others
coming along fast. Size isn't everything.
Many TAMPs don't want to get huge,
opting instead to develop unique
approaches to capture exactly the
advisory relationships they want.
TM
Some of the bigger platforms continue
to grow through acquisitions, while
consolidators like Orion find themselves
transformed into larger entities. Despite
a narrowing bulge bracket, continued
innovation and entrepreneurial forces
ensure that advisors today still have
a wide range of TAMP providers to
choose from, each with a different
set of capabilities, managers, and
technologies.
It's vital for the individual advisor to select
a TAMP provider with the culture and
capabilities to fit their needs-a provider
that has what it takes to help you
differentiate yourself from the competition
while streamlining internal processes to
reduce organizational drag.
BUILDING YOUR
RELATIONSHIP
What is the main constraining factor on
growing a wealth advisory firm? The
amount of time an advisor has available
to spend on all the administrative
tasks: prospecting, generating
proposals, onboarding clients, preparing
investment policy statements and asset
allocations, selecting the investments,
trading and monitoring the investments,
reporting and meeting with the client.
The wealth advisor must ask, " Which
of these activities is adding value to my
relationship with my client? " Which of
these aspects differentiate the advisor
from their competition and make a
difference to the client?
The answer is that only the client-facing
activities truly matter. The rest can be
outsourced, often to a specialist better
able to spend time on specific activities
like managing and selecting the
individual investments.
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Americas Best TAMPS 2024

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