LincSolutions began as a concept with third-party managed account provider London Pacific Advisors (LPA), now a part of SunGard, one of the world's largest technology concerns servicing the financial services industry. Financeware, New Frontier Analytics and StatementOne were a few of the experts Lincoln called in during the initial stages to help design and execute the components of the platform.
"The fact that SunGard can work with large, complex requirements is fairly unique to us," says Jack Waymire, president of SunGard Advisor Technologies in Sacramento, Calif. "We have 450 products organized into 120 business units. We have been buying service providers over the past 20 years, so we have the best technology in the country to link to the Lincoln platform. That way, Lincoln is not limited to technology created internally. I believe it creates an even more powerful solution for Lincoln's advisors."
Meanwhile, Citigroup affiliate Smith Barney has been working on its own brand of UMA platform for about a year, after numerous starts and stops with various configurations over a period of about ten years. Launched on August 4, the Integrated Investment Services (IIS) platform is the culmination of the expertise of the Smith Barney Consulting Group based in Wilmington, Del. IIS combines in a single account their approximately 190 mutual funds (TRAK), separate accounts for affiliated and non-affiliated programs (Fiduciary Services) and ETFs.
Says Tim Williams, director of product management for the Consulting Group, "We have over 400 investment choices that an FC [financial consultant] can use to create a portfolio for the client. It's the first time that it's all being incorporated in one proposal. The FC can use this information to create whichever proposal they believe is prudent for the client, within boundaries, because we will provide suitability boundaries."
Williams says this gives IIS an advantage over other platforms. "Unlike some competitors out there that are focusing on 'pick a pie' solutions, we started with the basic building blocks and are building 'customized pies' for the clients," "We're saying to our advisors that every international manager-whether it is a mutual fund or a separate account, or even an ETF-we've done research on it and it is at your disposal. And we've done that on a platform where we will continually monitor the portfolio for the client and for the FC. We'll give the FC a ton of tools to monitor it and rebalance it as we go forward. So, it is not just the front-end sales-we've re-engineered the process from front end to back end."
Alternative solutions, such as hedge funds, private equity and others that their advisors currently are scrambling for, may be coming, says Williams. "We do not have them on this system yet. The main reason is the private equity-hedge fund phenomenon is combined with a lot of complications-the back office, the operations, the daily reporting numbers. But we believe 80% of a good product is better than 0% of a perfect product. We spent untold dollars and a lot of effort to re-engineer the platform. Phase two has already started, and we're looking at additional investment choices for suitability."
Williams gives credit for the development of IIS to the financial service professionals who worked with Smith Barney. "This platform was built by FCs," he says. "And while I think we're pretty smart here in New York, we're never as smart as the FC in the field. This was accomplished with a team of about 65 FCs, sales assistants, branch managers, and tech analysts. These folks kept us on target."
But what of the majority of independent advisors who do not work with Lincoln, or are not with a major wirehouse like Smith Barney? What are their options for offering a UMA solution to their clients?
The Best Kept Secret
With all of the publicity and hoopla surrounding the latest developments at Lincoln and Smith Barney, some of the trade media have overlooked a major player in this niche: AdvisorPort Inc., now a division of PFPC and called PFPC Managed Account Services, by all accounts was the first entrant into the true UMA market. Its open architecture will allow access by virtually any firm. It is often referred to as a turnkey asset management program, or TAMP, a term that CEO Gregory Horn says does not accurately describe the firm.
"We have been in the UMA market for about three years now," says Horn. "When AdvisorPort was formed in 1999, we envisioned an open platform that would allow for the housing of any fee-based product that a fee-based advisor would use. We envisioned this platform would span the gamut of our products and include multi-strategy accounts with embedded hedge funds."