The number of managed accounts in rep-as-adviser programs increased 29% from 2007 through year-end 2009, but because advisers are required to contact clients every time a change is made to these non-discretionary portfolios, managed accounts are inefficient, Cerulli says.

Thus, while SMAs are expected to continue to grow in the double digits in 2010, capacity and scalability will slow long-term growth, the research firm says. And not all programs will benefit equally. Take the market downturn. In that period, home-office programs, despite their penchant for diversification, took the hardest hit, while rep-driven programs thrived.

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