Vestmark's Annmarie Rogers Recognized for Customer Service Leadership

March 7, 2012 | Permalink | Share We are thrilled to announce that our Senior Vice President of Customer Engineering, Annmarie Rogers, was awarded the Bronze Stevie for Customer Service Leader of the Year at the sixth annual Stevie© Awards for Sales & Customer Service on Monday, February 27.

For over ten years, Annmarie has been dedicated to providing superb, innovative customer service, helping our organization to build more than 1.5 million accounts and garner over $200 billion in assets.

John Lunny, CEO of Vestmark says of Annmarie, "Vestmark's unique deployment methodology is a best of both worlds scenario, providing customers with Software as a Service solution that is also customized for their unique environments. This advanced approach is made possible because of Annmarie's expertise, dedication and hard work. We're thrilled she has been recognized for her enormous contribution to our clients' success."

With more than 1,000 nominees from organizations of all sizes and trades, Annmarie was hand-picked by a team of 93 professionals and seven specialized judging committees. Notably, applicants were honored within more than 80 customer service, sales, and product solution categories, including awards for Innovation in Customer Service, Customer Service Department of the Year, and Contact Center of the Year.

"Earning the Bronze 2012 Stevie Awards for Customer Service Leader is a great honor," said Ms. Rogers. "This award is really a reflection of the commitment our entire team has made to our customers and that our organization has made to instilling a customer-centered culture."

Great job, Annmarie; the entire Vestmark team congratulates you on your wonderful achievement!

The Importance of Communication Standards

December 23, 2011 | Permalink | Share We are pleased to announce that Vestmark has submitted a Model Messaging schema to the Money Management Institute's Model Management Subcommittee to help accelerate industry standardization of data exchange between model providers and model receivers to support Unified Managed Account (UMA) programs and models only Separately Managed Account (SMA) programs.

Our own CTO and also Co-Chair of the MMI Data Standards Committee, Heeren Pathak, worked closely with the committee on the standards. In our recent release, Heeren commented:

"The VestmarkONE platform has had a full proprietary Model messaging capability for years and we have adapted this technology to meet the Models Subcommittee's Model Messaging Business Requirements to help move the standards process forward. We have also committed to fully implementing the Model Messaging Standards in the VestmarkONE platform, into both our Model Portal solution used by Sponsors and Overlay Managers to receive models and our Model Distribution solution used by Managers to send models."

We made this submission, representing years of research and refinement, with an interest in increasing overall efficiency across a multi-party investment "supply chain" - something that is very common in advisory programs. Other technology providers have quietly but actively worked against open communication standards and some have even gone as far as claiming ownership of client information and holdings. Such a practice is both short-sighted by the technology provider and detrimental to the larger industry.

Vestmark is committed to a different approach. We seek to streamline communication between parties and make it a non-factor however we can. This goal of making communication a non-factor has led us to build a large network of connectivity between industry participants out of necessity. But our true focus is on the value-added areas in enabling institutional-caliber investment advice to be efficiently managed and delivered at retail volumes.

Hopefully communication standards will catch on in this industry. That will allow us (and our other technology platform competitors) to invest more in the value-added areas that will help allow this industry to better serve the end investor.

Details Matter in Model-Based UMA Programs

September 22, 2011 | Permalink | Share There was a great article by Tom Stabile in FundFire yesterday covering a recent panel discussion on how managers need to evolve and adapt to attract UMA assets. (FundFire subscribers can click here to read the full article.) The main thrust of the points made by the panelists had to do with how managers interact with the different groups within their sponsor clients - from the gatekeepers and central research teams to individual advisors, managers need to adjust how they communicate and promote their investment strategies in a model-based relationship.

We see this all the time working with sponsors and managers alike. What's particularly interesting to us is how sponsors and managers ensure that the managers' investment process is being implemented by the sponsor. It's one thing for a sponsor to simply receive a model portfolio - it's another thing entirely to understand and support how a manager deals with all the unique situations that surface across each and every investor account (or sleeve) that's following the model. And how these investor-specific situations are handled can vary manager by manager. For sponsors and managers interested in preserving as much of the managers investment process as possible in a model-based world, it's important to be able to deliver that experience all the way down to the end investor. The customization and tax benefits of the UMA vehicle can't be overlooked so these details matter.

We also see too many situations where the sponsors receive model updates at the end of the manager's trade rotation. This is typically because the sponsor can't turn around the resulting trades intraday in a timely fashion, and therefore can't fit into a manager's trade rotation. Even worse is where the sponsor doesn't generate the trades until a nightly batch window. It's the year 2011 and we're seeing fairly volatile markets (an understatement), yet there are still situations where trades are being generated in a nightly batch and based on previous day closing prices. I can't imagine those portfolios are performing as well as they could - if they are then all of the science and R&D that's been poured into timely trade execution for decades in the institutional world has been misguided...not likely.

Vestmark has been addressing the communication, implementation and trading requirements unique to these model-based programs for years. Sponsors can choose how much or how little input they receive from participating managers via the web-based model portal in VestmarkONE. We've also invested heavily into the speed of our trade generation engine and the workflow processes to help our clients implement model trades as quickly as possible. Ultimately these things and countless other details could affect the integrity and performance of a UMA program. That's real money for each individual investor. Details matter.

Launching a Successful UMA Program: The Role of the Financial Advisor

August 12, 2011 | Permalink | Share Besides the ability to customize UMA programs to suit any firm's business model, the relative speed with which a program can be launched is a key factor driving the boom. However, to be successful, UMAs need to be thoughtfully designed and implemented. Principals have to consider the client needs, evaluate in-house competencies, determine what components to outsource, how to interact with managers, and the subject of this post: the Role of the Financial Advisor.

We discussed this topic at a recent industry event and the central question revolves around the level of control firms want to retain versus convey to their advisors. For example, does a firm want to allow its advisors to:

• Determine asset allocation targets?
• Choose the investment vehicles? (e.g., mutual funds, ETFs, or separate account strategies)
• Pick individual securities within a UMA sleeve?

We've seen wide variety of approaches to this issue and have identified five scenarios for advisors from most restrictive to most customizable. Each can be effective but come with certain benefits and drawbacks that are essential to understand when developing a UMA program:

• The Packaged Product - With this approach, the advisor selects from a set of pre-designed investment options and has no ability to customize. The program provides the advisors with a range of asset allocations with preset managers/strategies for each investment style. Considerations:
  
  • Greatest control over advisors.
  • Approach enables advisors to focus on client relationships.
  • Limited customization, although some firms have developed extensive menus of asset allocation options.
• Product or Manager Selection – This approach enables the advisor to select from a range of managers/strategies for each investment style, but the customization is still limited. Considerations:
  
  • Advisors retain the ability to focus their time on their clients.
  • Since Advisors will recommend specific managers and strategies, clients may ask about the performance of those selections. This in turn may create the need to provide the advisor performance information on the manager or sleeve.
  • Firms should still offer the Packaged Product option so advisors don't have to worry about manager selection if they don't want to.
• Customizable Asset Allocation – Here the advisor can add value by developing customized asset allocations for clients. Investments are then selected from a pre-defined list approved by the firm. Considerations:
  
  • The increased flexibility requires advanced compliance tools to monitor the asset allocation recommendations produced by the advisors.
  • Rebalancing, asset allocation changes and other trades all must be funneled through an approval process with an audit trail and done so efficiently so as not to disrupt trading.
• Advisor as Sleeve Manager – This approach allows the advisor to select from pre-defined asset allocation, choose investment solutions and managers for each sleeve from firm-approved list, and manage a sleeve themselves. Considerations:
  
  • Advisors do not have discretionary control over the entire portfolio.
  • From a compliance perspective, advisors are picking and trading securities, so again, it's critical to make sure they are adhering to a firm approved security list.
  • Firms should control the types of securities and implement specific controls, such as concentration rules.
• Advisor as Overlay Portfolio Manager – Offering the highest level of customization and therefore advisor control, this approach allows the advisor to define the asset allocation, choose which products/managers to use, and manage their own sleeves. Considerations:
  
  • The major concern is that advisors have significant control over a client's portfolio and therefore could create weightings or implement trades that violate a firm's investment policy. Firm must have adequate policies defined and means to enforce and monitor compliance.
  • This is attractive to advisors who have built their book around an ability to add value acting as the "overlay portfolio manager". These advisors are also likely to be more sophisticated with larger books of business and/or relationships with higher net worth clients.

The key takeaways are that UMA programs can be designed to suit any firm's business model and audience. However, it's crucial to build the program around how advisors manage their relationships with clients and the role they play in managing portfolios.

Catch the UMA Wave or Risk Missing the Boat Altogether

July 8, 2011 | Permalink | Share Unified Managed Accounts continue to gain momentum and firms that have implemented UMA programs have enjoyed significant growth. According to Cerulli data, assets in unified managed accounts had jumped to $129 billion at the end of the first quarter from $80 billion in 2010. That kind of growth isn't a rising tide, it's a tidal wave. Firms who fail to develop and implement a UMA strategy risk missing out on a clear growth driver for the next few years.

The good news is that it's easier than ever before for financial firms to launch UMA programs. It's becoming common now for UMAs to go from drawing board to launch in as little as 90 days. Also, the flexibility and diversity of programs means UMAs can fit any firm's business model, and there is room to tailor UMAs to suit specific niches to differentiate form competitors.

From our vantage point, we enjoy a unique perspective on the entire spectrum of programs. Vestmark is a benefactor of the surge in UMA business and this year eclipsed $250 billion and almost 1.5 million individual accounts on our platform. We quietly (as required by our clients) serve some of the world's largest banking and investment firms, broker dealers, asset management and private banking firms, wealth managers and mutual fund companies. We also serve the nation’s largest independent broker-dealer and overlay manager as well as the one of the fastest growing advisor-owned financial service firms for RIAs.

This exposure to so many different platforms and approaches enables us to identify some interesting trends and best practices for the development and execution of UMAs, and assist firms in pinpoint the best approach for them. Based on our work developing, launching and supporting UMAs, we’ve developed essentially a decision tree to determine the structure a given firm should choose:

• How active will financial advisors be in the UMA process? Can they:
  
  • Determine asset allocation targets?
  • Choose the investment vehicles (eg, mutual funds, ETFs, or separate account strategies) within the UMA sleeves?
  • Pick individual securities within a UMA sleeve?
• Who will be the overlay manager?
  • The advisor?
  • A central investment team?
  • A 3^rd party?
• What asset classes will be available?
• How can money managers communicate and implement their strategies?
  • Send a model portfolio?
  • Actively trade their sleeves?

We'll explore these topics, among others, in more detail within this forum.