Sponsors Move to Consolidate Platforms: Cerulli

With fees being key for advisors and investors, managed account platform sponsors said the following about their top priorities:

• 90% of sponsors stated that “simplifying and streamlining the advisor experience on our managed account platform” was one of their top three priorities.
• Closely aligned with streamlining platforms was platform consolidation, in which 48% of sponsors stated as one of the top three priorities for 2019. As the report notes, “To many executives at sponsor firms, one of the main goals of platform consolidation is to make an advisor more productive by reducing friction associated with logins to different platforms, multiple investment agreements requiring separate signatures, inconsistent pricing, and disparate middle-office and back-office procedures. “
• 38% of those surveyed stated that “providing better portfolio construction support” was a top priority “by creating programs to improve the advisors’ ability to be a portfolio manager instead of a stock picker.”
• Less important were reducing the expense of managed account programs and or platforms (19%) and simplifying fees across managed account platforms (19%).

Of course advisors need to read the fine print. The survey also asked sponsors how quickly consolidation and other changes could take place. Almost 67% said the changes would take more than two years, with 19% stating one to two years and just over 14% stating up to six months.

The process of consolidating platforms is slow — “a glacial shift,” according to one sponsor cited in the report. Merrill Lynch reportedly spent five years and $100 million to create its unified advisory platform Merrill Lynch One, according to the report. Most likely smaller firms will take longer; thus advisors should be patient.

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