Model Portfolio & SMA Strategists Showcase - Flipbook - Page 46
SMAs & MODEL PORTFOLIOS
simple account can be migrated in a
single conversation while a smaller, taxcomplicated one may take a year of
careful planning.
BUILDING IN A REVIEW CADENCE
None of the six steps above are onetime decisions, even though they’re
framed as a sequence to work through
once per client. A structure and provider
selection that made sense three years
ago deserves periodic revisiting.
A boutique manager’s key-person
situation can change, a TAMP’s fee
structure can shift, and a client’s tax
situation and account size can move
them across the thresholds discussed
throughout this guide.
Building a defined annual or biennial
review cadence into the practice’s
standard client-service calendar, where
the six-step framework gets revisited
rather than assumed to still be correct,
keeps this from becoming a decision
made once and never reexamined. The
due-diligence discipline discussed earlier
(p. 22) applies as much to an existing
relationship on its five-year anniversary
as it does to a brand-new one.
THE FRAMEWORK, COMPRESSED
Posture, then segmentation, then due
diligence, then full-stack fee math, then
platform compatibility, then the client
conversation, in that order. Skipping any
step doesn’t necessarily produce a bad
outcome, but it does mean the eventual
choice was made with less information
than was available on a decision that
will likely govern a meaningful share of a
client’s wealth for years.
The entire argument of this guide,
from the honest accounting of where
advisor time actually goes at the very
beginning (p. 5) through this closing
framework, has been that outsourcing
done deliberately is a genuine upgrade
in the quality of advice a practice can
deliver. Outsourcing done by default,
on whatever structure happened
to be easiest to set up, is a missed
opportunity.
Migrating the Practice Itself
E
very chapter before this one
has assumed a decision already
made. The advisor has decided
to outsource, and the remaining
questions are which structure, which
provider, and how to move an individual
client’s holdings without an avoidable
tax bill. This section addresses a
different, earlier problem: the practice’s
own transition from a fund-selection
business model to a managed-account
one, which is an operational and
business-model shift, not a client-byclient project. The previous chapter
sequences which clients to approach
first (p. 45).
This section is about everything that has
to be true of the practice itself before
that sequencing can even begin.
It’s worth being direct about why this
gets skipped. An advisor convinced by
the opening argument of this guide (p.
5) can reasonably want to start moving
clients right away, and the client-level
mechanics covered earlier are genuinely
the more interesting, more differentiated
content in this guide. But a practice that
migrates clients faster than it migrates
its own revenue model, compliance
apparatus, staffing, and public identity
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will hit friction that has nothing to do
with any individual client’s portfolio.
That friction shows up as cash-flow
strain, compliance exposure, confused
staff, and a public identity that no longer
matches what the practice actually
does.
QUICK MATH
Modeling the revenue
air pocket
If commission income is currently
$400,000 annually and the target AUM
fee structure would generate $550,000
once fully converted, that comparison
alone looks straightforwardly positive. But
if the actual migration takes 18 months
and commission income declines faster
than AUM fees ramp up, because newly
converted accounts take time to reach
full fee billing, or because compliance
re-papering lags client conversations, the
practice may see a temporary revenue
trough well below either number during
the transition itself. Model the month-bymonth curve, not just the before-andafter totals.
