Consolidation in managed account platforms is gradually increasing, according to a new analysis by Cerulli Associates today.
Since 2020, the percentage of platform sponsors who have consolidated their manage account platform into a single program grew from 14% to 30%, while those who have kept their multi-platform fell from 32% to just 20%.
Cerulli connects this increased adoption to a growing need for single, flexible platforms that offer “a broad array of product solutions as well as variable discretion entitlements.” Still, advisors are less keen on the one-stop platforms as it requires them to learn and understand an entirely new system, according to the report. As a result, platform sponsors list three factors they see as “most important” when implementing these systems, such as having a single advisor login for all managed account portfolios (80%), streamlined middle-office workflows (73%), and a universal client investment contract (67%).
“To help advisors overcome these points of resistance, providers must be able to prove that their platform will offer solutions that are a combination of easier, better, faster, and cheaper than those they are currently using,” said Scott Smith, director at Cerulli.
These features “create a path of least resistance” for advisors during the consolidation process—which include account opening and portfolio implementation and could last for up to two years—and are likelier to push professionals to be more receptive to the platforms, Cerulli states.
“The relationship between advisors and the technology they use to serve clients is one of the most crucial elements of the wealth management ecosystem,” added Smith. “Advisors must be able to leverage the solutions at their disposal to help meet the preferences and goals of their clients. In today’s wealth management environment, every part of that process is dependent upon advisors making the most of the technology platforms available to them.”
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
