Open Architecture Investing Moving Into The Wealth Management Mainstream, Ernst & Young Says Hot

ScottMartinScottMartin  
 
0.0 (0)
Write Review

 

Ernst & Young recently polled wealth managers and found that only 21% are still focused on building out their proprietary strategies.

 

The rest are unchaining their clients from in-house product and moving toward an open shelf, open architecture environment.

 

Open architecture is increasingly achieved via a unified managed account (UMA) structure -- like an SMA, only with multiple "sleeves" to accommodate as many asset classes as the client needs.

 

The money is allocated according to models constructed by third-party managers, but unlike an SMA, the assets never leave the sponsoring firm, so custody is not a concern.

 

Ernst & Young found that this kind of "overlay" system is becoming most popular among larger firms looking for ways to build truly unique portfolios for high-net-worth clients on a cost-effective basis.

 

At the moment, smaller firms tend to be forced into either cookie-cutter approaches or painstakingly handmade portfolios for every client -- generic in the one scenario and "proprietary" by default in the other.

 

And those firms with proprietary advice to sell are finding that their models can become a viable source of revenue. They no longer need to gather vast amounts of assets themselves.

 

 

 

This Website Is For Financial Professionals Only


User reviews and Comments

There are no user reviews/comments for this listing.
Already have an account? or Create an account