TAMPs consolidate to compete

In a crowded marketplace, turnkey asset management platforms are forging new tactics to jockey for additional market share

Current market trends as well as the volatility sparked by COVID-19 have fueled consolidation among turnkey asset management programs, and companies are forging new tactics to grab a larger slice of the pie. 

The dominant players, like TAMP powerhouse Envestnet, have found scale in mergers. Another top TAMP, AssetMark, realized growth recently through an initial public offering. Smaller firms have been absorbed into larger companies, like Orion Advisor Solutions’ purchase of Brinker Capital this year or Vestmark’s deal with Adhesion in 2018. 

What TAMPs have in common during a time of severe market volatility is the need to scale their businesses in order to grow. 

About $2.2 trillion in assets are being managed on such platforms, according to Tiburon Strategic Advisors, and the growing demand for low-cost technology will only increase the 180,000 financial advisers and 4 million clients that TAMPs already serve. 

Mergers — whether full buyouts or minority investments — seem to be a key component in the consolidation. The deals provide opportunities for the combined companies to attain the scale necessary to join the ranks of Envestnet, SEI and AssetMark in terms of assets, said Alois Pirker, research director of Aite Group’s wealth management practice.

“The TAMPs left that are not in the top three are likely asking themselves, ‘Who can we partner with or align with from an M&A perspective in order to scale?’” Pirker said. 

Yet catching up to the likes of Envestnet is no small feat. The largest TAMP by assets certainly remains king, with a 35% market share, according to Cerulli, and $215 billion in assets under management as of June, according to Envestnet. 


Sawtooth Solutions is one TAMP that is eyeing partnerships. It brought on Echelon Partners as its investment banker in August to land the dedicated capital it feels is necessary to stay competitive.

“The demand for outsourced wealth management services continues to grow stronger,” said Brad Pries, CEO and founder of Sawtooth. “As an independent firm, our growth rate coupled with our product offerings create an opportunity for us to seek additional partnerships and opportunities to accelerate our growth.” 

The market has been flooded with consolidations. In late June, Orion Advisor Solutions’ merger with Brinker Capital created an investment management firm and technology provider with approximately $40 billion in managed assets. 

Joining forces allowed Orion and Brinker to displace Buckingham Strategic Partners from its spot as fourth-largest TAMP by AUM.

More deals are on the horizon, said Chip Roame, managing partner at Tiburon Strategic Advisors. 

“The coming consolidation will narrow the TAMP market to a more reasonable number of players,” Roame said. “I could imagine the same 10 to 12 platform TAMPs, but just 20 to 30 product TAMPs — meaning half of the latter go away over the next five years.” 

Product TAMPs focus more on providing proprietary investment strategies and research, as opposed to platform TAMPs, which emphasize technology to access third-party strategists. 

Roame said those most at risk of being acquired are the product TAMPs, because there’s simply a lot more competition, with roughly 60 companies in the mix. 

“These firms will be pushed by the broker-dealers to become investment strategists on the white-labeled platform TAMPs, or just dropped,” Roame said. “So, yes, many of these smaller product TAMPs should be sellers.”


But is consolidation really the best way to compete? For Roame, the answer is yes. “If a TAMP can sell their company for a lot of money, then being acquired is not such a bad outcome,” he said. “Small product TAMPs should sell, but some may be too small for the bigger firms to bother buying.”

Another way for TAMPs to compete is to find a niche that allows them to differentiate and not just imitate, Pirker said. 

“Consolidation is always also letting go of certain things — you become less specific to a niche, because you’re trying to integrate into a common chassis,” he said. “That’s where a niche player can make solid business out of being very focused on a certain space instead.” 

For Orion and Brinker, focusing on a niche market is the play to scale and compete, said CEO Eric Clarke. The market Clarke has in mind: baby boomers in retirement. 

“When you look at who controls the wealth in our country, over half is controlled by baby boomers,” he said. “Those baby boomers, demographically, are retiring at the clip of 10,000 per day over the next decade.” 

That demand presents a business opportunity for Orion and Brinker, together, to snatch that market share and become the TAMP powerhouse in the retirement niche, Clarke said. 

“There’s this influx of baby boomers looking for retirement income, accumulating as much in assets as they can before they retire, and contemplating the transition of their wealth to the next generation,” he said. “The need for advice is skyrocketing right now.” 

SEI, too, is interested in tapping niche markets that the TAMP is not currently a part of, said Kevin Crowe, head of product development for Independent Advisor Solutions by SEI. 

“Buying something that’s strategic, that’s additive or entering a new market — that’s what’s important to our strategy right now,” he said.


Increased competition to scale in the space has driven prices down as industry players undercut one another in order to win new business. 

“Think about the whole value chain of delivering financial advice, from custody, clarity and execution, to manage investment management, and portfolio construction, to financial planning, advice to asset management — it’s all getting squeezed,” said Tom O’Shea, Cerulli’s director of managed accounts. “And that’s because advisers and their clients are becoming more aware of fees.”

President of Adhesion, Barrett Ayers, agreed, adding that fee compression, similar to what happened with zero-commission trading, will eventually enter the advisory space.

 “Advisers are going to have to pick a path — either you’re going to manage investments or you’re going to manage clients,” he said. “But the days of doing both are mostly gone.” 

One way to justify fees to clients who are much more sensitive to price compression today is by bolstering technology offerings. Envestnet, for one, has taken notice. 

The single factor driving consolidation among TAMPs is fees, said Envestnet executive managing director Andrew Stavaridis. Advisers are evolving their value propositions to spend more time engaging with clients’ financial wellness, not just giving advice on investments, he said.

“The adviser serving just a single product offering doesn’t survive in the future,” Stavaridis said. “Why is a client going to pay you a certain percentage per year on the assets you are managing for them unless you are bringing something more to the table than just investment advice? Advisers must evolve their value propositions. Those that don’t, won’t survive.” 

Advisers who want to grow are recognizing that a third-party TAMP can manage assets better and more efficiently — but no one can manage client relationships like a professional financial adviser. The paradigm shift in a financial adviser’s value proposition as a client manager is a major focus for AssetMark moving forward, said President and CEO Charles Goldman. 

The company is looking to invest in tech integrations, he said, and focusing on bringing open-architecture vendors onto the platform to give advisers additional choices of tech products.  

“The adviser value proposition is changing everything for this industry, and it means that TAMPs have to deliver the tools and capabilities to make the adviser incredibly productive, and time available to do the planning work,” Goldman said.

For Envestnet, the increased competition means the leading TAMP by assets will have to look beyond its traditional technology platform to maintain its spot at the top. As advisers’ clients focus on overall financial wellness, adding additional tech products to the adviser toolkit will help the company remain one of the preferred platforms for adviser technology, Stavaridis said. 

“Clearly, there’s competition out there, and we have to stay ahead,” he said.

More: Setting the Pace with Envestnet

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