Turnkey Asset Management Programs (TAMPs) have carved out an essential niche in the world of finance and investment management. They provide an efficient solution for financial professionals who seek to enhance their service offerings without diving deep into the complexities of asset management. This article will explore TAMPs in detail—how they function, their various types, their advantages and disadvantages, and key considerations for financial advisors looking to implement them.
What Is a TAMP?
A Turnkey Asset Management Program is essentially a fee-account technology platform tailored for a wide range of financial institutions including:
- Financial advisers
- Broker-dealers
- Insurance companies
- Banks
- Law firms
- CPA firms
These platforms are designed to allow financial professionals to manage their clients’ investment accounts with ease. TAMPs facilitate delegation of asset management responsibilities—such as investment research, portfolio allocation, and account administration—thus enabling financial advisors to focus on delivering superior client service in their areas of expertise.
Key Features of TAMPs
-
Technology Integration: TAMPs provide a sophisticated technology platform that integrates smoothly with existing systems to manage and track investments.
-
Back-Office Support: These programs take care of essential tasks like account administration, reporting, and billing, allowing financial advisors to redirect their efforts toward client engagement and acquisition.
-
Risk Mitigation: By outsourcing asset management responsibilities, financial professionals can limit their exposure to liabilities associated with poor investment performance.
Major players in the TAMP space include Envestnet, SEI, AssetMark, Brinker Capital, and Orion Portfolio Solutions. These companies cater to the diverse needs of financial professionals and their clientele.
Types of Turnkey Asset Management Programs
TAMPs can take various forms, each designed to meet specific investment strategies and client needs. Here are five common types:
1. Mutual Fund Wrap Accounts
A mutual fund wrap account offers investors access to multiple mutual funds with a single, consolidated fee. This structure simplifies fee management and provides investors with diversified investment options.
2. Exchange-Traded Fund (ETF) Wrap Accounts
Similar to mutual fund wrap accounts, ETF wrap accounts are structured to provide access exclusively to ETFs, which are often more tax-efficient and have lower expense ratios compared to mutual funds.
3. Separately Managed Accounts (SMAs)
SMAs are tailored for high-net-worth individuals, providing them with personalized investment management and greater control. Unlike mutual funds, SMAs are owned solely by individual investors, giving them detailed visibility into their portfolio.
4. Unified Managed Accounts (UMAs)
UMAs aggregate multiple investment types (stocks, bonds, derivatives) into a single account structure but manage each asset class separately. This provides investors with a holistic view of their investments.
5. Unified Managed Households (UMHs)
UMHs are particularly designed for families. They manage the investments of multiple household members, which can be beneficial for financial planning across generations.
Special Considerations When Using TAMPs
TAMPs can be off-the-shelf or customized to fit specific client needs. Many TAMPs are privately labeled, which means clients may be unaware of the third-party management behind their portfolios. They serve all investor demographics, from mass-market clients to ultra-high-net-worth individuals.
In terms of services, TAMPs can also include:
- Automated alerts
- Asset tracking and reporting
- Risk assessment tools
- Compliance services
- Investment policy statements
Fees for TAMP services typically range from 0.45% to 2.5%, which can vary widely based on the services provided and the structure of the investment programs.
Advantages and Disadvantages of TAMPs
Advantages
-
Time Efficiency: TAMPs allow financial advisors to free up significant time on administrative tasks, enabling them to focus on client relationships and new client acquisition.
-
Cost-Effectiveness: By leveraging the resources of a TAMP, advisors can avoid the substantial costs associated with developing in-house asset management capabilities.
Disadvantages
-
Reduced Control: When using a TAMP, financial advisors may have less control over investment strategies, which may not always align with their client’s risk profiles and objectives.
-
Potential for Higher Fees: Clients should be aware that the fees associated with TAMPs can often get passed down to them, which could make their investment strategies more expensive.
Frequently Asked Questions About TAMPs
What Are the Largest TAMPs?
Some of the largest TAMP providers are Mount Yale Capital Group, Adhesion Wealth, Matson Money, Sawtooth Solutions, Orion Portfolio, Brinker Capital, Buckingham Strategic Partners, AssetMark, Independent Advisor Solutions by SEI, and Envestnet.
How Do You Choose a TAMP?
When selecting a TAMP, financial advisors should consider various factors, such as:
- Alignment with their investment strategy
- Fee structures and potential costs passed to clients
- Services offered beyond basic asset management
- Quality of customer support and additional technology integrations
When Did TAMPs Start?
TAMPs originated in the early 1980s, gradually evolving as technology and market needs have changed.
Conclusion
Turnkey Asset Management Programs (TAMPs) provide financial professionals with innovative solutions to manage client investments effectively. By delegating asset management tasks to specialized third-party providers, advisors can enhance their client service while reducing operational complexities. As TAMPs continue to evolve, it is essential for financial professionals to carefully assess their options based on organizational goals, client needs, and cost structures to select the right TAMP to achieve optimal results.