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
“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
The key to managed accounts, said Harper, is it requires an ongoing conversation between an adviser and a client. “Managed accounts force advisers to sit down and spend time with clients each year and do a risk tolerance questionnaire,” he explained. “With a managed account, an adviser 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.”