Advisors can subscribe to MMAPS if they don't mind doing the due diligence or other functions themselves. If advisors want help with the due diligence process and/or want the services of an outside registered investment advisor to assist them in determining the right investment policy and asset allocation for the client, Schwab provides access to a list of RIAs willing to work with them. Currently, about ten RIAs on the Schwab list for advisors are available to use as such a resource. Schwab is willing to add to the list when advisors request a specific RIA they'd like to use.

Sometimes, open architecture can be limited by the managers or resources included on a sponsor's list, but with its willingness to add managers advisors want, Schwab has created an objective way for advisors to serve their clients. These criteria have primarily to do with the ability of the management firm to function within Schwab's systems so that Schwab can maintain the high level of service it has established with its advisors, as opposed to meeting firm-wide due diligence standards for list inclusion. Thus, Schwab's program truly has been open architecture from inception. To date, approximately 500 managers are accessible through Schwab's platform, which is used by more than 5,400 advisors.

The Competition

Fidelity's platform offers approximately 135 managers and more than 360 investment styles and disciplines with about $6.3 billion in program assets; TD Waterhouse serves about 2,500 advisor clients with approximately $70 million in assets under management.

Fidelity provides a comprehensive platform offering custody, investment solutions, technology support and business-building support principally to RIAs and third-party administrators (TPAs). It serves about 2,200 RIAs and has approximately $100 billion in total custodied assets. Over the last several years, according to Gary Gallagher, senior vice president of product management, Fidelity has concentrated on building overall product capability, of which the separate account product has been a critical component.

And according to Tom O'Shea, Fidelity's vice president of managed accounts, they've partnered with a variety of third-party sponsors offering wrapped programs through their RIAs. "We also support RIAs who want to construct their own programs, and we have managed to garner about $4 billion in assets from the RIA group. In addition, our sister organization National Financial, which is a clearing broker-dealer for an introducing broker-dealer (Common-wealth Financial Network to Bank of America), [has] managed to garner another $2.3 billion. So, in both our RIA group and our clearing broker/dealer, we've got about $6.3 billion in the program." Surprisingly, Fidelity has no proprietary money managers or investment programs.

Many of its advisor clients hold the CIMA and/or CFA designations. "We're finding that advisors may have smaller books of business and have clients that feel more comfortable working through advisors," says Gary Gallagher. "Separate accounts will become an even more important part of the client's overall portfolio in the coming years. If you've got a $1.4 million average account size, then you have to bring in $6 million or $7 million in assets."

Fidelity divides their advisor clients into two groups-those who are willing and able to perform their own due diligence and set up their own programs, and others who want to work with an outside due diligence provider that has leveragable technology and wraps the fees together. Approximately nine months ago, Fidelity launched a new program called the Separate Account Network. "That's for advisors willing to perform their own due diligence and work directly with managers," explains O'Shea. "We're finding increasing numbers of advisors who want to do that as separate accounts become more popular."

The average account size of a Fidelity separate account client is $1.4 million. Its average client relationship is between $5 million and $7 million. "We've been able to attract the platform of true wealth managers dealing with ultra-high-net-worth individuals," adds O'Shea. "We've had this relationship with separate account managers for several years, and we're really focusing on simplifying things and adding more services."

At TD Waterhouse, the Managed Assets Network (MAN) was started to meet advisor demand for access to institutional separate account managers, according to Christopher Murtha, regional vice president of institutional services. "At that time, we had a list of 25 to 30 different managers with whom we had negotiated a pricing schedule," says Murtha. "The firms we solicited were recommended by our advisor clients. Over the last couple of years, as the separate account industry has grown, so have the original needs of our advisors expanded."

In finding a solution for that expansion of needs, Waterhouse decided to team up with third-party platform provider EnvestnetPMC. "We felt that partnering with EnvestnetPMC made the most sense because it fit into our philosophy of best-of-breed strategy," he adds. MAN was the original program offered by Waterhouse in 2000. Since the agreement with EnvestnetPMC, a new offering has been created called the Managed Assets Program (MAP).