A turnkey asset management program provides a fee-based technological platform that financial advisors, broker-dealers, insurance companies, banks, law firms, and CPA firms can use to manage their clients’ investment accounts.
Turnkey asset management programs are tailored to help financial professionals save time and concentrate on delivering services in their field of expertise, which may not involve complex asset management tasks like investment research and portfolio allocation. TAMPs allow financial professionals and firms to delegate asset management responsibilities to specialized third-party providers.
Key Takeaways
- Turnkey asset management programs are fee-based platforms for asset managers, broker-dealers, CPAs, and other financial professionals.
- TAMPs can provide technology, back-office support, and tasks like investment research and asset allocation.
- Prominent TAMP providers include Envestnet, SEI, AssetMark, Brinker Capital, and Orion Portfolio Solutions.
- TAMPs facilitate firms in saving time and channeling more energy into acquiring new clients and servicing existing ones.
- By collaborating with a TAMP, users cede some control over decision-making while bearing a service fee.
Understanding Turnkey Asset Management Programs (TAMPs)
Entrusting the role of asset manager to a TAMP can help financial professionals and firms enhance profitability by freeing up time for client acquisition and personal meetings. Additionally, TAMPs can reduce expenses, considering developing a proprietary asset management system can be costly. TAMPs also take care of account administration, billing, and reporting, helping mitigate the risk associated with poor investment performance.
Notable TAMP providers include Envestnet, SEI, AssetMark Investment Services, Brinker Capital, and Orion Portfolio Solutions.
Types of Turnkey Asset Management Programs (TAMPs)
1. Mutual Fund Wrap Accounts
A mutual fund wrap account encompasses multiple mutual funds within a single fee structure, lowering overall fees by bundling trading costs.
2. Exchange Traded Fund Wrap Accounts
ETF wrap accounts operate similarly to mutual fund wrap accounts but focus exclusively on ETFs, streamlining investment choices.
3. Separately Managed Accounts (SMAs)
SMAs cater to high-level investors with significant capital. Unlike mutual funds pooled among investors, an SMA is exclusively owned by a single investor.
4. Unified Managed Accounts (UMAs)
UMAs consolidate various investments into distinct categories, managing them separately while integrating them into a unified portfolio.
5. Unified Managed Household (UMH)
A UMH addresses the investment needs of an entire household, managing assets for parents, children, and possibly grandparents living together.
Special Considerations
TAMPs come in both off-the-shelf and customized variants, often privately labeled to make the outsourced management seamless to clients. These programs cater to a broad spectrum of investors, from mass-market clients to high-net-worth individuals, providing base technology and additional back-office support like asset tracking, automated alerts, compliance services, and risk analysis.
TAMP service fees typically range from 0.45% to 2.5%. Consequently, evaluating the value of time saved and services gained versus the cost is vital for managers.
Advantages and Disadvantages of TAMPs
TAMPs offer substantial benefits to advisors by outsourcing numerous functions, freeing time to enhance client service and business growth. This outsourcing can be cost-effective, reducing overhead and passing savings to clients.
Understanding fee structures is critical for investors, as TAMP charges on advisors might affect client costs negatively. Additionally, advisors must ensure that the TAMP’s investment strategy accords with their risk tolerance and investment objectives.
Turnkey Asset Management Programs (TAMPs) FAQs
What Are the Largest TAMPs?
Top TAMPs include Mount Yale Capital Group, Adhesion Wealth, Matson Money, Sawtooth Solutions, Orion Portfolio, Brinker Capital, Buckingham Strategic Partners, AssetMark, Independent Advisor Solution by SEI, and Envestnet.
How Do You Pick A TAMP?
Choosing a TAMP involves evaluating alignment with your investment strategy, custodial relationships, fees, technology compatibility, additional services, support management, and offered technology.
When Did Turnkey Asset Management Programs Start?
TAMPs began emerging in the early 1980s.
The Bottom Line
Turnkey asset management programs (TAMPs) offer financial institutions efficient investment solutions to aid in managing clients’ investment accounts. They are fee-based services that significantly bolster investment advisors by offloading complex tasks. Advisors should thoughtfully consider costs, investment strategies, and additional services to ensure a TAMP is the right fit for them and their clients.
Related Terms: asset management, investment platforms, exchange traded funds, mutual fund wraps, SMAs, UMAs, UMHs.
References
- U.S. News and World Report. “What Is a TAMP and How to Choose One”.
- InvestmentNews. “10 Largest Tamps by Assets”.
- Kitces. “Why TAMPs and Outsourced Investment Management Are the Future for Most Advisors”.
