Managed Account Tech Firm Survives The Storms

Advocates say a managed account approach can offer affluent investors the advantages of diversification while protecting them from the weaknesses of mutual funds aimed at middle-income customers, such as panic selling and distributions of big, taxable capital gains payments.

Oberon’s managed account system includes a collection of model investment portfolios, asset-allocation software, sales and marketing tools, an online proposal generator, support for opening and managing accounts, and online reporting tools.

Oberon uses “proprietary” technology that is not designed to be compatible with competing managed account systems.

Forrester Research Inc., Cambridge, Mass., a consulting firm, reviewed the managed account industry in an October 2001 report and suggested that financial advisors seemed to prefer “standards-based” systems that were compatible with other managed account systems.

When Forrester interviewed advisory company representatives, “63% said that operational inefficiencies are a major hurdle in offering the product,” Forrester analysts write in the managed account report.

“Even if it’s only a handful of distributors pushing their proprietary systems, this will be a disaster,” one advisor told Forrester.

But Celent Communications Inc., Boston, another consulting firm, recently looked at the Oberon system and four other systems for managing accounts for clients with at least $100,000 in assets. Celent ranked Oberon first and described its proprietary technology as a strength.