Managed Account Industry Shows No Sign of Slowing Down

By Rob Klapprodt, Corporate Strategy Officer


Investment advisory program inflows soared last year and 2018 is proving to be no different.

Unscathed by the turbulent markets of Q1, Cerulli Associates reported assets in managed account programs increased by 1.4% in the first quarter, surpassing $5.9 trillion.

As reported in FundFire, Cerulli places total Q1 net flows for advisory programs at just over $150.7 billion, and the Money Management Institute (MMI), which is tracking a different set of firms, measures them at $95.1 billion.

According to both firms, Unified Managed Accounts (UMAs) continue to lead as one of the fastest growing segments, with Cerulli data citing assets increasing by 2.2% to reach $986.4 billion and MMI recording them at $954.2 billion in AUM. We previously highlighted this trend in our blog, Managed Accounts Boast Strong Flows, Are You in the Game?, attributing the growth to industry heavyweights such as UBS, Edward Jones, Morgan Stanley and Merrill Lynch adopting UMA programs as a central way for their advisors to access a variety of different products to meet their clients’ needs. Trailing close behind UMAs, Rep as Portfolio Manager (Rep as PM) and mutual fund programs also boasted strong first quarter flows of $23.8 billion and $21.9 billion respectively, according to MMI.

Tom O’Shea, Cerulli’s director of managed account research, attributes this trendto firms shifting more mass affluent clients into managed account programs, noting that managed accounts in general have a wider adoption but that average account size in some of these programs is beginning to decline. “This whole category is starting to sweep up other investor types that are less affluent and therefore you’re starting to see the use of other commingled vehicles that are easier to use in small balance accounts,” said O’Shea.[1]


Let’s take a look at a few other trends driving the growth of managed account programs:

  • Smaller accounts are moving into firm or third-party discretionary programs while larger accounts are represented through Rep as PM programs. O’Shea notes we’re seeing this shift as smaller advisors realize the benefits of outsourcing to mutual fund model providers either at the home office level or to third parties.[2]
  • An increasing number of advisors are leveraging home office research. More and more advisors in the regional and independent broker dealer space are adopting fee-based accounts and outsourcing their portfolios as they rely on home office research or research from TAMPs to construct their portfolios.
  • As investment management becomes more commoditized and the overall fee structure is compressed, advisors note an inefficiency in managing portfolios themselves. They’re seeking other ways to deliver value to their clients while increasingly outsourcing portfolio construction to their home office or to a third party.
  • Those looking to retain investment discretion turn to Rep as Advisor programs, fueling the $13.9 billion in Q1 net flows MMI reported this year.

At Vestmark, we focus on pairing well-designed managed account programs with robust technology to enable firms to serve more advisors, collect more assets per advisor, and enhance overall productivity. Let us know if your firm is interested in leveraging managed accounts to reap these benefits, we’d be happy to chat about our capabilities and take your firm to the next level.

[1] Verbrigghe, Danielle. FundFire. “Managed Account Assets Climb in Q1 Despite Rocky Markets.”
[2] Verbrigghe, Danielle. FundFire. “Managed Account Assets Climb in Q1 Despite Rocky Markets.”

By Rob Klapprodt, Corporate Strategy Officer