Cerulli: Flexibility is key in choice of managed account programs

By National Underwriter

National Underwriter


By Warren S. Hersch

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.

Originally published on LifeHealthPro.com