Assets on turnkey asset management platforms have exploded in recent years as advisers focus on building relationships with clients instead of managing their portfolios. There is now an estimated $3 trillion in assets on TAMP platforms, a number that’s expected to increase in the coming years, according to a new report by The Wealth Advisor.
That momentum only accelerated during the Covid-19 crisis as advisory shops were locked down and advisers were forced to look to new technologies to help run their businesses.
“What people today are looking for, now that they’ve taken that initial deep post-pandemic breath, is flexibility,” said Scott Martin, executive editor at The Wealth Advisor. “When all the offices shut down, some wealth managers accelerated their technology timelines out of necessity, a pure question of survival. Those who felt the disruption most acutely are extremely wary now.”
The TAMPs that landed new relationships during the pandemic, when advisers were desperate for any technology that could keep them running, are now building on those relationships with new products and services, he said.
“[Advisers] don’t want to get behind the curve again,” Martin said in an email. “And those who embraced these solutions out of necessity are finding that they like it.”
RIAs account for most of the TAMP adoption, with more than $93 billion held in TAMPs, or almost a third of the $3 trillion in assets. That momentum is expected to accelerate as the independent channel shows continued growth.
The annual research ranks America’s best turnkey providers and lists the top 25 TAMPs, which include such well-known names as Orion Advisor Solutions, Envestnet Inc., AssetMark Inc. and SEI.
This year’s top prize went to Morningstar’s Managed Advisor Wealth Platform as the all-around best TAMP. Filling out the top three were AssetMark and Orion.
Three out of four advisers have problems with goal management as they seek to grow, with many of them looking to increase their offerings to clients, according to a recent study by the AssetMark Inc. The study of 750 wealth managers found the most common challenges advisers face today are scaling their business for growth and spending the time needed on business-building activities, like financial planning with clients, practice management and new business development.
In fact, more than nine in 10 advisers who have outsourced at least some aspects of their business reported their total assets have grown as a result. Ninety-five percent of respondents also said the change meant they had a better work-life balance, according to AssetMark’s recent Impact of Outsourcing study.
“A lot of advisers simply want to automate as much of their processes as they can to scale or to ultimately create a stronger succession plan,” Martin said. “The ambitious advisers want to scale to pick off vulnerable accounts from weakened competitors.”
While the investment portfolio was traditionally the heart of the relationship, automation has freed up the adviser to address more important issues, like caring for clients, according to the report.
The popularity of turnkey providers has also led to considerable consolidation. Sawtooth Solutions was acquired by financial product distribution firm Simplicity Group last year, and in 2020, Orion Advisor Solutions merged with competing turnkey asset management platform Brinker Capital to create an investment management firm and technology provider with approximately $40 billion in managed assets.
“Crisis forced advisers to open up their practices,” Martin said. “Now, they’re starting to look around on the platforms that saved them and seeing all the capabilities.”
The research, conducted in February, reflects user satisfaction, quality of experience and overall brand penetrations, according to the report.
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Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.