Whether you’re seeking a new platform or just looking to diversify your clients’ assets, here are several aspects to consider when reviewing a TAMP.
Looking to outsource your investment management operations? You’re not alone. More than half (53 percent) of advisors use a turnkey asset management program, according to a February 2014 report from Northern Trust.
Almost half of the nearly 200 advisors surveyed said they outsource more than half of their clients’ assets, while over a third reported say they outsource 75-100 percent of clients’ assets. About 40 percent of advisors outsource all of their clients’ assets.
Why? For most advisors, clients invest with them because of the relationship. The investment product has significantly less importance than in the past. Outsourcing operations to a TAMP (Turn-key Asset Management Program) allows advisors to leverage their time and resources, with a greater focus on clients.
And clients also like the set-up. Almost all advisors say clients’ initial reaction to outsourcing is positive, according to Northern Trust’s findings. Four out of five advisors say they experienced no loss of clients and/or firm revenue.
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Although most advisors are already outsourcing their investment management operations, 68 percent are using multiple firms in an effort to diversify clients’ assets.
So it can be helpful to know what aspects to look for when evaluating a new TAMP. The differentiators fall into three major buckets: range of options and flexibility, service and technology.
For those advisors who are not yet using a TAMP, a good portion say it’s because their investment philosophy is not available as a prepackaged offering. Even with those who are, about 57 percent of advisors say they’re outsourcing specific asset classes while just 29 percent are outsourcing all activities, according to the February study.
That means most advisors need to seek out TAMPs that offer both self-directed platform as well as services that outsource asset allocation and manager selection decisions to third-party strategists.
At FTJ FundChoice, an advisor can self-direct on our platform—manage their own models and make their own decisions, pick their own mutual funds and such. But we also offer market movement strategies program, which allows advisors to work with capable firms and watch them closely.
The program is built around three distinct mandates: strategic market movement, diversifiers and tactical market movement.
Overall, about half of the firm’s approximately $5 billion in assets is invested with advisor-directed and the other half is with our investment strategist program. But the assets in the advisor-directed channel used to be far greater. We’ve found the trend is going toward advisors outsourcing more of their investments to third-party money managers.
There are a lot of companies that offer investment solutions, but one of the components in choosing a partner is evaluating their level of service. A good TAMP should simplify advisors’ lives.
One of the things we pride ourselves on is our level of service—we really try to offer unparalleled service. Two years we changed our model to a regional service team in order to provide advisors with the experience of calling in and speaking with a localized team with whom they can build a relationship.
Every advisor is equipped with a regional team dedicated to their business. Service team members are trained to assist you on everything from new account setup, to redemption processing and account trading.
Like most financial services companies today, we are committed to creating new offerings and new opportunities using technology. But sometimes that requires behavioral changes, as well as new systems and tools. That’s where TAMPs can diverge. Instead of looking for a TAMP that provides the latest technology (let’s hope they all do), advisors should look for a platform that also offers support as well.
For example, FTJ FundChoice opened a new portal where advisors can submit work orders online. With this technology in place, our customer service will be very efficient — all the orders go to the right place, we can track it, advisors can track it and see where in the process it is. It’s very similar to how the shipping companies track a package.
We accept that evolution is always going to be a moving target. You can’t just hand off new technology and expect everyone to immediately catch on. We need to provide the necessary steps that enable advisors to evolve with us.
Gary Manguso is the Vice President – Product Strategy at FTJ FundChoice and focuses on investment strategy development through increased advisor capabilities and consistency throughout their practices. Before taking his current role in 2014, Gary led the sales and thought leadership efforts for a number of TAMPS. Since 1990, Gary has been an industry innovator, working with advisors to grow their businesses. Gary enjoys helping advisors provide their clients with an innovative and retention-based client experience.