Growing Efficient Advisory Programs Through Platform Consolidation

Developments in Managed Accounts
by Alexander Camargo, October 15, 2013
Industry Trends
North America

Abstract

Over the past 18 months, Celent has seen renewed interest among wealth managers in single infrastructure platforms.

In this report, Growing Efficient Advisory Programs Through Platform Consolidation: Developments in Managed Accounts, Celent explores the state of managed programs, the continuing barriers to efficient management of these programs, and how wealth managers are attempting to address these inefficiencies.

From a product perspective, single infrastructure platforms fold separately managed accounts (SMAs), mutual fund wrap, unified managed accounts (UMAs), rep-as-portfolio manager, and other programs into a common format. The platform serves as a chassis where advisors can open and select account structures, and the components and channel management tools sit atop.

“Despite decent growth in managed programs, one of the biggest barriers to greater adoption is inefficient management of product platforms,” says Alexander Camargo, Analyst with Celent’s Securities & Investments Group and author of the report. “The wealth platform will streamline fee schedules, contracts, welcome kits, and require only one signature. Most importantly, it will move services toward relationship-based pricing and client-centric models of service.”

This report begins with an overview of the managed accounts space, describing key drivers in the wealth management business. This is followed by an analysis of managed accounts, looking at growth in certain programs, and addressing why growth in the UMA and fee-based market has not been as robust as expected. It then examines the growth of platform consolidation so as to increase efficiency in managing a variety of products. This analysis includes business challenges solved, important tools in these platforms, and key challenges of this emerging model.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Introduction

2

 

A Brief History of Managed Accounts

2

 

Advisory Programs/Accounts

2

Drivers in Wealth Management Industry

4

The State of Managed Solutions

5

 

Explaining Celent’s Overestimates

5

 

Market Trends

6

 

Continuing Barriers to Efficient Management of Fee-Based Programs

8

Platform Consolidation in Wealth Management

9

 

Business Challenges Resolved

9

 

Ongoing Challenges

12

Looking Forward

13

Leveraging Celent’s Expertise

15

 

Support for Financial Institutions

15

 

Support for Vendors

15

Related Celent Research

16

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