LPL Buys Major UMA Integrator Concord Wealth Management


Concord Capital Partners -- better known to people who watch the "investment overlay" space as Concord Wealth Management -- is a major vendor of the expertise and technology that drive unified managed account (UMA) platforms.


Buying it is a big deal for LPL, but the moving parts are pretty deep inside baseball.


UMAs give trust companies and RIAs a cost-effective way to outsource the construction of client portfolios to best-of-breed outside managers. 


People who've adopted an UMA approach like it because client assets never leave their control, as they would if the portfolio was allocated out to SMA managers.


Instead, the outside managers' ideas are brought in, effectively "overlaying" them on the client portfolios according to an in-house manager's allocation plan.


The in-house manager retains the ultimate responsibility over the investment decisions, and so can -- for example -- tweak the overlaid models to give clients better overall tax treatment, obey social responsibility mandates, or take separately held assets into account.


It's a very interesting technology and calling it "open architecture" doesn't quite do it justice.


Since LPL is already an open-architecture shop in the sense that it doesn't push any proprietary products, this is an especially good fit for them. 


Installing Concord overlay systems would give LPL advisors a better one-screen view of how various portfolio designs will work for their clients under various circumstances, and it's likely that Concord's manager relationships will help round out LPL's existing shelf.


LPL tantalizingly hints at a deeper push into the trust services market as well.


Between independent trust companies and captive trust departments, the ability to support personal trusts is getting hot as a differentiator for advisors who want to offer more than investment management, or who want to keep their existing clients on their books for generations to come.


If LPL is moving closer to the trust market, its affiliates might soon have an easier time competing on that proposition.

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