Building Bridges to Breakaway Advisors: How Asset Managers Can Maintain Critical Relationships

By Lauren Yeaton Hunt, VP, Product Marketing


As legacy investment platforms are continually evolving, challenged by new investment strategies and new ways to package client focused solutions, so too are the established relationships among asset managers and their top advisors. Many wirehouses and mammoth broker dealer firms are restructuring their investment platforms beneath pressured fee structures for their advisors. Eager for more flexibility and less oversight, many advisors “breakaway” to establish themselves as independents to better serve their clients.

With this great wave of migration, where does this leave an investor’s assets and the financial advisors who manage them? Advisors want to maintain their previously established investment solutions as they assure clients that changes to their affiliation model will be in the clients’ best interest. But an advisor’s move to independence for the betterment of his/her business is a difficult vision to sell when it necessitates a taxable event for the investor. Similarly, asset managers want to not only maintain their relationships with advisors, but expand them, offering a range of new products that can be distributed and managed efficiently across a spectrum of affiliation models.

A bridge over troubled waters

When a financial advisor works with a firm based on a captive affiliation model – like a wirehouse – some of the investment solutions (SMA strategies or asset allocation models specifically in this case) applied in client portfolios are proprietary and only available to be implemented, held and distributed by that wirehouse firm. When an advisor leaves the firm, the client’s holdings in those historically ‘non-portable’ investment vehicles may require a liquidation and move to cash at the new firm or custodian.

Today, in this scenario, when an advisor approaches a manager to ask “how can I maintain your strategies for my clients as I go independent and custody with xyz custody platform….”, many asset managers don’t have a good answer for them, and even when there is a technically workable solution, it’s highly un-scalable.

It’s easy for asset managers to feel stranded. Deprived of their traditional means of distribution, the asset manager can only sustain their current advisor relationships by working directly with these breakaway advisors one by one – often an expensive and time-consuming proposition that only gets more complicated with scale. But what if there was a better way?

The alternative is a hub that serves as an efficient meeting ground for all parties involved, facilitating access for advisors while reducing overhead for asset managers.

“In a way, we act as hosts to the party,” says Steve Camp, Managing Director, Vestmark Advisory Solutions. “Our model marketplace – Vestmark Model Marketplace, or VMM, becomes that platform to provide a neutral space for advisors and managers to conduct business, a platform that can create immediate portability for previously non-portable investment solutions.”

Once signed on with VMM, asset managers only need to post their models and strategies once to give them universal exposure to all participating advisors. This immediately gives managers a helpful response when a breakaway advisor approaches them about the portability of a previously difficult-to-move SMA strategy. This enables the asset managers to retain the assets and enables the advisors to help clients avoid liquidating securities and creating taxable events.

“It’s a win-win for everyone,” Camp says. “Asset managers get to keep and expand their AUM, while advisors can hold on to previous products and shop among new ones. All the while, Vestmark does the heavy lifting.”

Getting started is easy. Participating asset managers introduce their advisors to Vestmark, which will handle the brief and simple onboarding process to get them connected to VMM – which is custody and technology agnostic on the advisor’s side of the equation.

Camp concludes, “Vestmark has a compelling offering now that just becomes a better one over time. The larger the platform becomes – the more managers, products and advisors involved – the greater the value to all participants.”

Interested managers and advisors can learn more by visiting or calling 781-224-3640.

By Lauren Yeaton Hunt, VP, Product Marketing