Investment Access, Flexibility and Scalability
Investment Management
Advisor Managed
Generally, the financial advisor manages all investment management and selects ETFs, mutual funds, stocks, or bonds. There are minimal consultative partners who are tied to the accounts from a compliance and performance perspective.
TAMP Managed
Advisors have a wide range of investment, risk analysis, and proposal tools to assess their strategies. They also have access to institutional asset managers and can utilize their strategies to improve their strategy. This is known as “sleeving” in a “unified managed account.” TAMPs also provide expertise in areas advisors may like support, such as customized bond portfolios
Models and Trade Order Engines
Advisor Managed
Advisors may manage models or manage every client account individually. This tends to involve trading directly at the custodian, which creates trading inefficiencies, especially if the advisor uses multiple custodians and manages accounts individually.
TAMP Managed
TAMPs help advisors scale their models and institutionalize them with investment experts and analytical tools. All clients within a model are traded simultaneously, so all clients are treated fairly, regardless of client account size or custodian. TAMPs like ours still allow advisors to customize accounts as needed.
Client Services, Middle and Back Office Support
Advisor Managed
When advisors do not use a TAMP, they often hire team members to manage all aspects of paperwork, custodial interaction, money movement, and technology. Or worse yet, they do it themselves. This is inefficient and a cost center for advisors. The result is higher overhead or the inability to focus entirely on these tasks, meaning a greater chance of potential errors.
TAMP Managed
Client accounts on TAMPs have the benefit of an extra set of eyes. TAMPs provide a middle and back office, often named a client services team. This team’s role is to manage all aspects of account opening and servicing, review all paperwork, and ensure clients receive their money on time – all based on the advisor’s instruction
Leveraging Technology to Enhance the Client Experience
Increased Time with Clients
Advisor Managed
Many clients see their financial advisor as the one who does it all (and often wonder how they do it). They provide money management, financial planning, and most of all, they know their needs. Without a TAMP, financial advisors can often be spread thin and need to manage all these areas of their business themselves.
TAMP Managed
By leveraging a TAMP, a financial advisor can spend less time trading accounts and still provide quality investment strategies (whether fully outsourced to institutional managers or simply from utilizing technology, trade engines, and analytics tools). This means clients receive more time from their financial advisor to focus on their goals, objectives, and dreams. High-end TAMPs will help advisors build customized strategies around financial plans for clients.
Client Portals
Advisor Managed
The chances are that your financial advisor provides a client portal to you or has the option to. The role of this dashboard is to keep you informed of all your finances managed by your advisor. Many advisors wish their client portals were more flexible and user-friendly for clients.
TAMP Managed
TAMPs provide access to client portals that tend to have additional features rolled into them due to their scale. TAMP client portals often include advisor branding, on-demand reports for clients, aggregation/manual account input, and allow communication via a document vault.
Reporting and Transparency
Advisor Managed
All clients receive custodial statements at least quarterly by law. Financial advisors may also have access to reporting tools at their firm. It is often the advisor’s responsibility to dream up and create reports independently.
TAMP Managed
Transparency and support are two significant benefits of the TAMP world. Financial advisors can leverage robust reporting capabilities and receive help to create whichever reports their clients may find relevant and provide those in a digital manner directly in their client portal.
Comprehensive Service, Support and Risk Management
Billing and Flexibility
Advisor Managed
Regarding billing, most advisors bill their fees quarterly or monthly. They may also review outside holdings without diving too far into the details, as they cannot be compensated for these assets, which can be a disservice to a client.
TAMP Managed
TAMPs have an enhanced role in managing client assets and thus have greater flexibility. TAMPs allow clients to roll in non-billable holdings or build around holdings with significant gains (and slowly unwind them). Some TAMPs have even figured out how to help advisors manage their clients’ held-away assets.
Community of Resources
Advisor Managed
Oftentimes, financial advisors are on their own with an assistant or small team. This is a testament to their ability to manage multiple tasks for clients but means they may have a relatively limited circle of business partners to receive new ideas.
TAMP Managed
Using a TAMP, an advisor expands their group of resources to include ongoing business growth ideas; introductions to partners who provide research, management, or held-away account management; or assistance in succession planning. These are all generally part of a relationship that can help clients and financial advisors.
Compliance, Due Diligence and Risk
Advisor Managed
In advisor-managed strategies directly at the custodian, the bulk of the due diligence and compliance risk falls on the financial advisor. There is no partner to screen and select managers in the marketplace, and there are minimal ongoing risk tools. This presents a risk for clients, advisors, and firms.
TAMP Managed
TAMPs offer comprehensive risk profiling tools that archive client risk scores and answers, then compare their portfolios to those scores. The TAMP’s compliance department approves all managers, and client assets also fall under the TAMP’s risk group. This additional layer of surveillance provides peace of mind for clients and financial advisors.