BOSTON - Managed accounts used to be for the wealthy, but in the last 18 to 24 months they have become increasingly available to the mass affluent because of a reduction in costs and an increase in efficiency, said AJ Harper, managing director of Lockwood Advisors, an affiliate of Pershing, a BNY Mellon company, in an interview at the Money Management Institute annual conference on Wednesday.

“Now we can deliver a solution to someone with $10,000 in assets whereas before clients would need $50 million with a blue chip bank,” Harper said.

The managed account industry is a $2.2 trillion industry, according to Cerulli. At Pershing, which has $225 billion in assets, Harper said 50-60% of new clients are managed account clients.

The key to managed accounts, said Harper, is it requires an ongoing conversation between an advisor and a client. “Managed accounts force advisors to sit down and spend time with clients each year and do a risk tolerance questionnaire,” he explained. “With a managed account an advisor is not just selling a product one time. They are creating an ongoing relationship with a fiduciary obligation.”

Now with the regulatory push and the scale of the industry, there is a significant economic incentive for firms to move into managed accounts and to cut costs. “Managed accounts are no longer for the high net worth investor. They are for the emerging investor. And today’s emerging investor is tomorrow’s high net worth investor.”



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