Advisors at Morgan Stanley are the force behind a new trend to manage portfolios themselves rather than outsource to an asset manager.
Advisor portfolio management has grown to $150 billion from only $17 billion in 2003. And it's growing by $1 billion to $2 billion each month.
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But only about 10% of advisors are qualified to appropriately allocate a client’s assets. This is a concern for the quality of advisor asset management.
So the firm has rolled out benchmarks to measure how well individual clients are doing.
Performance is compared in three categories—conservative, moderate, or aggressive. Individual performance is measured within each category instead of against stock or bond indexes.
Advisors of clients who trail the performance of others are tagged as needing more help. They are provided more training and/or resources. Or they may be encouraged to outsource management and focus more on financial planning or other areas.
Although the learning curve is at this point a bit steep, the trend is considered a good one
because advisors who manage assets have to be compensated by fees.
Advisors are taking more control and more responsibility and portfolio management by advisors may be closer to the client’s goals. That probability alone is a critical factor in attracting clients with larger assets.