SMAs, UMAs, HMAs—there’s certainly no shortage of industry TLAs (three letter acronyms).
Yet AMAs, or advisor managed accounts, are of particular interest.
Advisor managed accounts differ from their industry counterparts in four distinct ways, especially in the retirement saving and investment space, according to a recent whitepaper from the Empower Institute. They include participant-level 3(38) services, personalized discretionary investment management, a customer (user) experience, and call center support.
Employing a managed account product in this manner can result in as much a 200 basis points of outperformance, according to Edmund Murphy, president and CEO of Great-West Life & Annuity Insurance Company, which oversees Empower Retirement.
On Wednesday, the company released its own advisor managed account, which it says drives “integration between advisor firms and Empower by combining the strength of advisors’ portfolio construction and plan design expertise with Empower’s newly redesigned advisory services technology platform and client experience.”
AMAs provides advisor firms with a “seamless path to offer their own managed account services directly to their Empower Retirement clients, leveraging Empower’s cutting-edge advisory services experience and infrastructure. Advisor firms serve as the registered investment advisor for the service and control the investment approach as well as pricing and branding.”
“When you marry a program like this with an advisor who’s engaged at the participant level, when there’s a plan and an ongoing commitment to continuous investment, we think the results will be a lot stronger,” Murphy said.
Beta test
The firm initially instituted a “beta test” with some of the larger intermediary partners with which it does business—including SageView Advisory Group, Resources Investment Advisors, Mesirow Financial and others—before it’s official rollout Wednesday.
“Advisor Managed Accounts offers retirement investors the best of both worlds – combining the strengths of SageView’s advisors and dedicated investment team with all the services and technology of Empower,” Randall C. Long, founder and managing principal of SageView, said in a statement. “It allows us to focus on designing a prudent retirement strategy for employees while having Empower there to deliver an optimal participant experience. We fully expect this revolutionary new managed account model to drive better outcomes for employees.”
Empower, the nation’s second largest recordkeeper, is in active discussions with other advisory firms about offering AMA to their clients.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.