Though the turnkey asset management industry is consolidating, there is room for smaller players that can demonstrate a unique value to advisers.
One opportunity lies in creating niche portfolio models employing specific knowledge or areas of expertise. With the commoditization of investment management, advisers are looking for anything that can give them an edge.
SmartX Advisory Solutions began in 2013 as a TAMP connecting advisers with alternative and hedge fund strategies and has grown to $1.4 billion in assets under administration. Now the company provides a full range of investment products and differentiates itself with technology, including a real-time trading platform and tight integration with SS&C Advent's Black Diamond portfolio management software.
TAMPs like Asset Dedication provide fixed-income strategies that help advisers manage bond ladders and optimize returns on the yield curve. And several firms are creating models to meet the growing demand for environmental, social and governance investing.
"The industry is looking at an impending recession and thinking about what type of solutions do we bring into the mix to lessen the impact of volatility," said Aite Group senior analyst Dennis Gallant.
The proliferation of model marketplaces also provides more avenues for TAMPs to get their products in front of advisers. Going forward, Aite Group predicts model strategists will design even more creative types of investment models, such as real estate, insurance or portfolios managed by artificial intelligence.
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