“Let me frame the picture,” he professorially began. “The excitement isn't necessarily in how each strategy is implemented in the portfolio; often that involves simply pushing a button. The excitement is in how the advisor uses this from a scalability standpoint.”
He noted he and his colleagues are “all about financial planning,” so they begin with the plan, and any decisions they make always have an eye toward how it will affect the overall plan. “Each plan is unique; each case is like a fingerprint, and no two are alike. Any given client might have employer restrictions or tax issues, they might be in a regulated industry, or they might have their own behavioral issues.”
Traditionally, he said, additional staff was needed to keep tabs on all of it. Now, managed accounts are there to help with personalizing the portfolio decisions – to the benefit of his clients and his business.
“There was a point where I didn't know how we were going to grow because we were at capacity with staff,” he added. “It was our managed account system that solved for it and allowed us to keep growing. You can look at a spreadsheet with four clients. With 400 clients, it's a completely different picture. You need something else, and a managed account system is often it, especially with clients that are considered to be high-net-worth.” Among the managed solution capabilities he routinely employs:
-He leverages Cetera research portfolios for 75% of his accounts, which are in a model format and allow him to spend more time interacting with clients, rather than performing all of the investment management research, ongoing due diligence and timely asset allocation decisions himself.
-He uses restrictions to prevent the sale of positions with tax implications. -He uses platform options like security swap and trade minimums to minimize costs, prevent small and unnecessary trades, and ensure account activity is appropriate and limited to significant transactions.
When asked about a specific client problem and how his managed solutions platform was able to address it, Bill related a recent issue with a successful self-employed individual in need of help with complex buy, sell and tax strategies.
The client, in his early 40s, had built a very successful consulting business specializing in the beverage industry with a particular expertise in advising companies in the spirits and liquor space. “This client saw multiple investing opportunities in the beverages industry that are public knowledge, but he had to carefully time his buy and hold strategies in order to avoid triggering outsized tax obligations,” he explained. “While this is all detailed within the comprehensive financial plan that we developed for him, the key was to ensure total precision with execution. The rebalancing function within the firm's advisor workstation platform was instrumental toward this end.”
He also ticked off how managed solutions helped an executive with significant levels of fully-vested company stock and a client who was a financial industry regulator and, consequently, needed to have extremely vigilant restrictions in place around what equities were purchased for her portfolio, when they were purchased and how they were purchased. Lastly, he mentioned the case of a professional public-company auditor with access to non-public material information, and how the client had to avoid even the appearance of any conflicts of interest when it came to his equity portfolios.
In each case, managed solutions were critical to successful outcomes, and suddenly the reason for Bill's excitement became clear.
This profile appeared in the March 31, 2014 special supplement to InvestmentNews “Managed Solutions: Meeting today's challenges.” This supplement was written by InvestmentNews Custom Media with support from the MMI and partner firms. To download the full supplement, click here.”
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