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Portfolio > Asset Managers

Cerulli: Flexibility is key in choice of managed account programs

By Warren S. Hersch

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Most financial advisors identify flexibility to choose asset allocations as important when deciding which managed account programs to use, according to a new report.

Cerulli Associates, Boston, discloses this finding in a report, “The Cerulli Edge, Managed Accounts Edition.” The report explores program dynamics of managed account programs and details full-service, third-party vendor relations. The survey also provides a quantitative update on assets and growth rates, program sponsors, third-party vendors, asset managers and cash flows.

More than six in ten (61 percent) financial advisors flag flexibility to choose asset allocations as important when deciding on a managed account program, the report states. Less important factors identified by the advisors include:

57 percent—Advisor flexibility to choose investments.

49 percent—Investment recommendations/models from the platform provider.

47 percent—Flexible pricing.

47 percent—Client assets.

43 percent—Manager availability.

24 percent—Vehicle availability.

19 percent—Revenue to advisor.

13 percent—Marketing material.

Asset managers also ranked a strong relationship with home-office teams as the most effective way to grow assets on platforms in which they maintain existing relationships.

On a scale of one to six—one signifying the least effective and six the most effective—respondents ranked “increased relationship with the home-office research team” a 4.7. Scoring lower on the scale were wholesaling (4.1), multiple-vehicle distribution through existing relationships (3.7), breadth of product line (3.4) and value-added services/support (3.3).

The report observes also that the percentage of managed account programs with more than $10 billion in assets has steadily grown during the past four years. In the first quarter of 2013, accounts exceeding $10 billion represented 72 percent of the managed account market. This compares with 53 percent in the first quarter of 2009, a 19-point rise.

 

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