The New Managed Account Solutions Handbook: How to Build Your Financial Advisory Practice Using Managed Account Solutions

243 Pages·2007·2.15 MB·English

by  Stephen D. Gresham

The New Managed Account
Solutions Handbook
HOW TO BUILD YOUR FINANCIAL ADVISORY
PRACTICE USING MANAGED
ACCOUNT SOLUTIONS
Stephen D. Gresham
Arlen S. Oransky

John Wiley & Sons, Inc.
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The New Managed Account
Solutions Handbook
HOW TO BUILD YOUR FINANCIAL ADVISORY
PRACTICE USING MANAGED
ACCOUNT SOLUTIONS
Stephen D. Gresham
Arlen S. Oransky

John Wiley & Sons, Inc.
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Copyright © 2008 by Stephen D. Gresham and Arlen S. Oransky. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
Wiley Bicentennial Logo: Richard J. Pacifico.
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Library of Congress Cataloging-in-Publication Data:
Gresham, Stephen D.
The new managed account solutions handbook : how to build your financial advisory
practice using managed account solutions / Stephen D. Gresham, Arlen S. Oransky.
p. cm.
Rev. ed. of: The managed account handbook. c2002.
Includes bibliographical references and index.
ISBN 978-0-470-22278-2 (cloth)
1. Financial planners—Handbooks, manuals, etc. 2. Investment advisors—Handbooks,
manuals, etc. 3. Portfolio management. I. Oransky, Arlen S., 1956- II. Gresham,
Stephen D. Managed account handbook. III. Title.
HG179.5.G742 2008
332.6—dc22
2007032146
Printed in the United States of America.
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To Phyllis and Glen Gresham, for a lifetime of
guidance, inspiration, and love
—S.G.
To my wife, Christine—your patience and support
have been unending
—A.O.
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Contents
Foreword Christopher L. Davis vii
Preface ix
Acknowledgments xi
Chapter 1 The Evolution of Managed Accounts 1
The managed account industry, which began amid pension reform, has
mushroomed in response to clients’ demands for a consistent process to man-
age their investments.
Chapter 2 The Revolution of Unified Managed Accounts 15
Unifi ed managed accounts have evolved as investors sought greater coordi-
nation among their investments and more diversifi ed portfolios.
Chapter 3 Mutual Fund Advisory Accounts 36
Financial advisors can leverage the potential of multiple mutual funds in a
single client account by using a mutual fund advisory account.
Chapter 4 Alternative Investments 42
Alternative investments offer greater diversifi cation and risk management
than ever before, and many clients are asking that alternatives be included
in their portfolios.
Chapter 5 Key Benefits of Managed Accounts and
Recurring Revenues 61
Managed account solutions allow for a more effi cient use of the advisor’s
time, access to a more affl uent clientele, a consistent revenue stream lever-
aged by the market’s growth, and a more valuable business entity; plus,
clients prefer fees over commissions.
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vi Contents
Chapter 6 How to Tell If Managed Account Solutions Are
Right for Your Practice 75
Are managed account solutions right for you? Here’s how to evaluate your
potential for success.
Chapter 7 Transforming Your Practice into a Wealth
Management Business 94
Step-by-step instructions for explaining managed account solutions to cli-
ents and prospects, gathering information and developing an investment
policy statement, and structuring an effective client meeting.
Chapter 8 Developing Your Managed Account
Solutions Business 120
Referrals from current clients can bring prospects to your door, but you must
know how to ask for them and have materials on hand to promote your practice.
Chapter 9 Positioning Yourself as a Solutions Provider 135
By cultivating mutually benefi cial relationships with service providers,
allied professionals, and the media, you can develop a steady stream of refer-
rals to help grow your business.
Chapter 10 Attracting and Retaining Clients 151
Seminars remain an effective marketing tactic in the sale of managed
accounts. Here are proven techniques for staging a successful meeting and
building your reputation.
Chapter 11 Building on Your Success 161
Throughout the course of the client relationship, you will have multiple
opportunities for capturing additional assets and building your managed
account business.
Chapter 12 The Future of Managed Account Solutions 175
Industry leaders present their visions of what the future holds for managed
account solutions and the advisors who provide them.
Epilogue: This Isn’t Your Father’s Advisory Practice 187
Appendix A: Sample Business Plan 190
Appendix B: Manager Evaluation Formulas and Ratios 197
Appendix C: Sample Investment Policy Statement 200
Appendix D: Seminar Checklist and Sample Invitations 209
Advisor’s Resource Guide 217
Index 223
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Foreword
O
ver the past fi ve years, the amount of assets held in separately managed
accounts has more than doubled, to $805 billion. This growth, impressive
as it is, pales in comparison to the growth that lies ahead. Over the next fi ve
years, the fi rst wave of baby boomers—the richest class of people in world
history—will begin to retire, initiating a decades-long transfer of wealth
estimated at up to $40 trillion.
These baby boomers have spent their professional lives accumulat-
ing wealth in employer-sponsored retirement plans, individual retirement
accounts (IRAs), and other investment vehicles. When the time comes for
them to transfer their a ccounts and begin disbursement, many are going
to seek the aid of fi nancial advisors who can provide them with all of the
services they require: Account consolidation. Innovative investments. Risk
management. Tax effi ciency. The only platform that can provide all of these
services—and more—is the managed account. Advisors who have estab-
lished themselves as providers of managed account solutions will reap the
benefi ts of this historic wealth transfer.
I n 1997, a group of money management visionaries realized that the
future of the fi nancial advisory profession lay in separately managed accounts.
They formed a group, the Money Management Institute (MMI), to serve as
a forum for industry leaders to meet, discuss issues of mutual concern, and
advocate on behalf of their members on legislative and regulatory issues.
Today the MMI membership represents 95 percent of the industry’s assets
under management. The organization is the nation’s foremost authority on
managed account solutions.
Steve Gresham, a member of the MMI Board of Governors, and Arlen
Oransky, MMI vice president, are uniquely suited to write the book on
managed account solutions.
Steve, executive vice president of Phoenix Investment Partners, helped
create some of the industry’s fi rst fee-based accounts back in 1984, and he’s
been an integral part of the managed account story ever since. His expertise
has been sought by CNN, PBS, Bloomberg Radio and TV, and many other
media outlets, including the N ew York Times , Fortune , and BusinessWeek . In
addition, Steve is in constant demand as a speaker at fi nancial conferences,
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