RBC Dain Rauscher hopes a new unified managed account platform will help it target mass-affluent customers with services once reserved for the ultra-wealthy. The firm is looking to serve people with $250,000 to $500,000 to invest, thereby competing with larger brokerage companies, said Erik Preus, the firm's director of investment consulting services.
The nation's eighth-largest full-service securities company, with $108 billion of assets under management, including $16 billion of fee-based assets, introduced its RBC Total Portfolio earlier this month. The platform features an open architecture array of products and services that let financial consultants offer a diversified portfolio of products, including separately managed accounts, mutual funds and exchange-traded funds, in a single account.
Banks have known for a while that they have an opportunity to develop wallet share by offering fee-based products such as unified managed accounts. Banking companies like Wachovia Corp., Citigroup and AmSouth Bancorp., along with bank affiliates like KeyCorp.'s McDonald Financial and PNC Financial Services' PFPC Worldwide have all launched unified managed account platforms. Wachovia started its unified managed account platform, Diversified Managed Allocations, in December 2002. By the following August, it had accumulated $500 million, and as of July 31, it had $2.57 billion.
Analysts said most large banking companies have been tentative until recently about taking unified managed accounts down-market. When AmSouth started its platform in August, however, it said its sweet spot for the product was customers with $250,000 to $1 million of assets.
"Unified managed accounts can offer a lot of customization, and that can attract a lot of aspiring wealth," said Kevin Daniels, a Boston analyst. "Banks have the opportunity with this platform to attract the wealthy before they become wealthy."
The remaining hurdle, though, is maintaining relationships with ultra-wealthy customers, Daniels said. Banks cannot afford to alienate ultra-wealthy clients who seek specialized, exclusive products, he said, and these customers might be put off if the product is made available to a relatively large number.
Preus said unified managed accounts are flexible and can be customized for ultra-wealthy investors to offer significant tax benefits. "We expect unified managed accounts will be a core fee-based product offering for even the most affluent customer," he said.
The program is expected to be rolled out to all RBC Dain Rauscher financial consultants in October after a pilot program this month. RBC Total Portfolio was introduced with Placemark Investments as the overlay manager. Placemark inaugurated its unified managed account product in the fourth quarter of 2002 through a partnership with McDonald Investments.