Model Portfolio & SMA Strategists Showcase - Flipbook - Page 14
SMAs & MODEL PORTFOLIOS
a practical, often-overlooked advantage
of consolidation beyond the tax
management and rebalancing benefits
already covered.
A SIMPLE DECISION
FRAMEWORK
Three questions do most of the work.
How many mandates does this client
actually need? One clear objective,
one clear strategy points toward a
stand-alone SMA as the simpler,
cheaper option. Multiple asset classes
or strategies means a UMA earns its
complexity.
How much does the client value
consolidated reporting? Sophisticated
clients who track performance closely
often prefer the granular, managerspecific statements an SMA produces.
Busy clients, or those who’ve
expressed frustration with multiple
statements in the past, are better
served by a UMA’s single view.
Is tax optimization a priority across
the whole relationship, or just one
piece of it? If the answer is “the whole
relationship,” increasingly the default
answer for high-net-worth households,
the UMA’s ability to harvest losses and
rebalance holistically usually outweighs
whatever manager-level control gets
traded away.
None of this is a permanent decision.
Clients migrate from stand-alone
SMAs into UMAs as their relationships
and account sizes grow, and the
portfolio transitions chapter (p. 36)
covers exactly how to manage that
kind of transition without triggering
an avoidable tax bill in the process.
For now, the point is simpler: This is a
structural choice that should be made
deliberately, client by client, rather
than defaulting to whatever structure
the advisor’s TAMP happens to make
easiest to set up.
The TAMP Layer
AMP, short for Turnkey Asset
Management Program (or
Platform, depending on who’s
talking), is one of those acronyms that
gets used constantly in this industry
while meaning something slightly
different to whoever’s using it. This
chapter pins it down operationally:
what a TAMP actually does day to day,
what it doesn’t do, and how to think
about it relative to the model-portfolio
and SMA structures already covered.
T
WHAT A TAMP IS,
MECHANICALLY
A TAMP is best understood as an
outsourced investment operations
desk. It is not itself a money manager.
The actual portfolio construction
typically comes from the third-party
strategists and asset managers whose
models the TAMP makes available.
What the TAMP provides is everything
around that: account opening and
onboarding, custodial integration, trade
execution, rebalancing, performance
reporting, fee billing, and, increasingly,
tax optimization tools that operate
at the platform level rather than the
individual-manager level.
Put simply, the model or SMA
strategist decides what to own. The
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TAMP is the plumbing that gets that
decision executed inside a specific
client’s account, keeps records
straight, and generates the statements
everyone downstream actually looks at.
SCALE AND ADOPTION
This has moved from a niche
back-office solution to mainstream
infrastructure. The U.S. TAMP
ecosystem now represents roughly
$3 trillion in platform assets, and
advisor usage has climbed from
around 10% a decade ago to roughly
45% today, an adoption growth rate of
about 16% annually. That’s a genuinely
fast diffusion curve for back-office
infrastructure, and it tracks closely with
the broader outsourcing shift covered
in earlier chapters (p. 5).
As the overall industry has scaled (SECregistered advisors collectively managed
BY THE NUMBERS
A decade, a different
industry
TAMP adoption: roughly 10% of advisors
a decade ago, roughly 45% today.
Total platform assets: about $3 trillion.
That’s not gradual creep. It’s a back-office
technology going from niche to majority
practice inside one career’s worth of time.
