By Lisa P. Gray
Everyone in the industry today is talking "Separate Account Speak." Everyone. So what really is going on with separate accounts? How fast are they growing and in what sectors? A good indication is the growth that Boston-based MFS Investment Management has experienced this year after entering this booming business. The firm also has an interesting slant on how it views the benefits.
Bill Taylor, MFS' senior vice president and director of private portfolio services, offers good insight on their popularity and how valuable the individual advisor is within the managed account process. "We hear a lot about customization," says Taylor. "The general press seems to only look at tax efficiency and the ability to place restrictions on accounts, which is something you can do with separate accounts but not a lot of other investment vehicles. But the popular press is missing the fact that the financial planner or the financial consultant is the one who provides the customization. They're picking the most appropriate money managers for the client, and that's a huge customized benefit to the client."
Multiple-discipline products or accounts (MDPs or MDAs) are springing up all over in today's separate account world, but Taylor stresses the importance of using the MDP as part of the consulting process and not just as the next "hot dot" product to sell. "One of the things we do when we hold educational seminars for clients is to tell them that they need to get involved with the process. We may not even be the most appropriate managers for them, but the process will help them stay in the market longer, and ultimately, those are the people who will be the most successful."
What's so great about separate accounts? They're an excellent way for you to deepen client relationships by getting to know their financial lives, educate clients in the benefits that individual financial planning and consulting can yield and create a lifelong, higher-quality business and life plan for yourself. It's a win-win plan for everyone.
"We've developed tremendous relationships with firms in our variable-annuity and 401(k) areas, and now separate accounts are giving people a different way to have access to our professional management," Taylor says. "All of our field reps (called regional vice presidents) have been trained in the Certified Investment Management Consultant (CIMC) coursework so that when they speak to advisors and consultants, they can emphasize the most important part of the separate account business, which is the process of customizing the separate account investment vehicle to each individual client's particular needs."
Lisa P. Gray is a Memphis, Tenn.-based financial writer and former veteran advisor serving the affluent market.
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