U.S. Managed Accounts 2023
Decisions About Discretion
Strengthen and Scale Advisory Solutions
- Explore the ongoing theme of customization through direct indexing and how increased use of this investment style will impact managed account sponsors, asset managers, and third-party strategists
- Assess how managed account sponsors are prioritizing platform consolidation and how this impacts the industry
- Understand how advisors are using of managed accounts and how additional customization is allowing advisors to move managed accounts down-market
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This report dissects the managed account marketplace, providing key business metrics gleaned from Cerulli’s managed account database. It contains analysis and data critical to managed account asset managers and program sponsors, such as market sizing and growth projections, distribution dynamics, business practices, industry economics, proliferation of fee-based relationships among advisors and firms, developments in product design and delivery, channel-specific attributes, investor pricing, and program features. It also Cerulli tracks the growth of various managed account program types, such as rep-as-portfolio-manager (RPM), unified managed accounts (UMA), and rep-as-advisor (RA) programs.
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A Note from the Authors
Home Offices Want Portfolio Discretion; Advisors Want Portfolio Control—Is There a Middle Ground?
Michael is an analyst in the Wealth Management practice at Cerulli, specifically working in Managed Accounts. He is a contributor to the U.S. Managed Accounts annual report and The Cerulli Edge series, providing quantitative and qualitative analyses. He also supports various consulting projects within the Wealth Management practice.
Prior to joining Cerulli Associates, Michael started his career as a financial analyst at Granite Telecommunications where he created quote proposals and developed special pricing analyses in response to customer needs.
Full biography here.
With more than 20 years of financial services industry experience, Scott leads Cerulli’s research efforts focused on investor behavior and advisory relationships. In his time at Cerulli, he has authored more than two dozen in-depth reports on topics ranging from wholesale distribution to digital advice platforms. His research helps Cerulli’s clients understand how to optimize their platforms given the evolving demand for financial advice.
Scott started his career wearing a headset at Putnam Investments’ service center in 1996, before moving to more strategic roles at MFS Investment Management starting in 2000, and then to Cerulli in 2007. In addition, he currently serves as member of the CFP Board’s Digital Advice Working Group, and as a judge for the wealthmanagement.com Industry Awards.
Full biography here.
Managed account assets are expected to grow to $15.6 trillion by 2026, exceeding 13% annual growth over the next four years. As sponsors balance growth in fee-based programs with portfolio oversight, the question of maintaining rep-as-portfolio-manager (RPM) programs is top-of-mind.The percentage of sponsor firms with a formal process for removing discretion has swelled to more than half (52%) in 2023, with an additional 16% considering this step. Furthermore, nearly one-third (27%) of managed account sponsors are making modifications to their RPM programs to align them with their current business objectives, while another 15% are actively encouraging advisors to give up portfolio discretion.
Still, there remains a large cadre of advisors who define portfolio construction and security selection as a core tenet of their business. As such, sponsor firms may be better served modifying these programs to better fit with their overall strategy, and giving those advisors who want to take discretion better tools to be effective PMs, rather than trying to remove advisor discretion entirely.
Our new report, U.S. Managed Accounts 2023, explores sponsor firms’ views on discretion and the steps they are taking to encourage advisors to outsource, as well as asset managers’ perspectives on discretion and the actions they are taking to better align with their distribution partners.
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