Three Benefits of Partnering with Institutional Asset Managers or TAMPs

By Lucas Felbel, CIMA®, Director, Portfolio Services

In the middle of complicated, multi-step client situations did you ever wish you could make the day longer? Imagine the difference that a productivity boost of 10 hours a week could make in growing your financial advisory practice. This is exactly what advisors who have outsourced investment management report, according to a Fidelity survey.¹

Not only that, but 84% of advisors who outsourced investment management surveyed by Asset Mark reported higher business valuations, while 91% reported growth in total assets under management and 83% reported higher personal income.²

There’s no doubt that more advisors than ever are taking advantage of third-party asset management platforms (TAMPs) to outsource investment management of client assets. In fact, TAMPs represent a $2 trillion market with independent advisors—including RIAs and IBDs—contributing $117.48 billion dollars in AUM, according to America’s Best TAMPs 2024.³

If you’re considering outsourcing investment management, TAMPs—including Dynamic’s Asset Management—are increasingly demonstrating they are more than ready for prime time. Not only have costs come down, but efficiency is increasing as the types of assets offered via outsourcing is rising. In this blog post, you’ll learn about the benefits of TAMPs in scaling and building value for your practice.

Free Up Your Schedule to Prospect, Convert and Maintain Relationships

While advisors possess the ambition to grow their practices, most lack the time to do so. In fact, while 93% of advisors described themselves as motivated to grow in a Financial Planning Association survey.⁴ However, only 12% were comfortable with their actual growth rates.⁵

TAMPs provide the opportunity to manage your time more efficiently than handling investment management on your own or with your own team. A 2023 Cerulli Associates survey noted that advisors who leverage TAMPs for practice management tasks spend less time on investment management and related activities such as research, due diligence and trading.⁶ This frees them up to spend more time on client-facing and revenue-generating activities. Contrast this with advisors who don’t outsource to TAMPs, who report spending less than half of their time working directly with clients.⁷

Time is the most precious resource you have. The more time you spend on activities such as investment management, the less time you have to develop meaningful relationships. By outsourcing at least part of your investment management activities, you put time back in your schedule for prospecting, converting and maintaining the relationships you need to grow your practice.

Customize Investment Solutions to Client Situations and Preferences

As TAMPs increase the variety of investment managers and asset classes they offer, you and your clients can benefit from this growth. The most flexible TAMPs offer a variety of models that allow you to customize far more than you could on your own. Among the structures TAMPs offer include:

• Model Portfolio Accounts
• Separately Managed Accounts
• Unified Managed Accounts
• Unified Managed Households

Virtually any asset class is available within a TAMP, which can also manage assets such as qualified and non-qualified accounts, alternative investments, real estate and more.

Many TAMPs provide the assistance of overlay managers with model portfolio implementation, investment customization and tax optimization. Typically, TAMP fees range from 0.75 to 2.50% of AUM, depending on the services provided—and fees are falling over time. Within the relationships you already have with your existing service providers, you may be able to leverage preferred pricing that could produce additional costs savings. TAMPs also offer the potential to provide a consistent client experience for your clients, which is important in client retention.

Position Your Practice for a Potentially Lucrative Transition

In an increasingly competitive environment, you need every advantage you can get to grow your practice, satisfy your clients and add value to your life. Let’s face it—your administrative challenges aren’t likely to subside anytime soon. Regulatory burdens are increasing, fee pressure is rising and you’re not getting any younger.

Affiliating with a TAMP that reflects your values, offers the services you and your clients need and allows you to spend more time in client facing activities is not only a smart action, but a necessary one. If you’re like most advisors, your practice is an important component of funding your retirement. Bringing in the right TAMP partner can help ensure that you maximize that value and create a positive transition experience for your clients when the time comes to exit.

For more on this topic, check out the latest podcast from our CIO Kostya Etus, Weighing Machine, Episode 245.

Invest with Intention.

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Sources:

1. “2023 Fidelity Financial Advisor Community—Investment Approach and Product Survey,” Fidelity Investments, Oct. 10, 2023
2. “The Impact of Outsourcing,” Asset Mark, 2022
3. “America’s Best TAMPs,” WealthManagement.com, 2024
4. “New Study Reveals Psychological Factors Hindering Growth for Financial Advisors,” Financial Planning Association, May 9, 2023
5. “New Study Reveals Psychological Factors Hindering Growth for Financial Advisors,” Financial Planning Association, May 9, 2023
6. “Considering a TAMP? Evaluating the Growth Opportunity,” Morningstar.com, May 23, 2023
7. “Considering a TAMP? Evaluating the Growth Opportunity,” Morningstar.com, May 23, 2023

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For more information, contact Dynamic’s Investment Management team at (877) 257-3840, ext. 4 or investmentmanagement@dynamicadvisorsolutions.com.

As Director, Portfolio Services, Lucas Felbel, CIMA®, leads the implementation, monitoring and evaluation of trading activities at Dynamic Advisor Solutions.

Disclosures

This commentary is provided for informational and educational purposes only. The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. This is not intended to be used as a general guide to investing, or as a source of any specific recommendation, and it makes no implied or expressed recommendations concerning the manner in which clients’ accounts should or would be handled, as appropriate strategies depend on the client’s specific objectives.

This commentary is not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. Investors should not assume that investments in any security, asset class, sector, market, or strategy discussed herein will be profitable and no representations are made that clients will be able to achieve a certain level of performance, or avoid loss.

All investments carry a certain risk and there is no assurance that an investment will provide positive performance over any period of time. Information obtained from third party resources are believed to be reliable but not guaranteed as to its accuracy or reliability. These materials do not purport to contain all the relevant information that investors may wish to consider in making investment decisions and is not intended to be a substitute for exercising independent judgment. Any statements regarding future events constitute only subjective views or beliefs, are not guarantees or projections of performance, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond our control. Future results could differ materially and no assurance is given that these statements or assumptions are now or will prove to be accurate or complete in any way.

Past performance is not a guarantee or a reliable indicator of future results. Investing in the markets is subject to certain risks including market, interest rate, issuer, credit and inflation risk; investments may be worth more or less than the original cost when redeemed.

Investment advisory services are offered through Dynamic Advisor Solutions, LLC, dba Dynamic Wealth Advisors, an SEC registered investment advisor.

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