Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
A turnkey asset management program (TAMP) provides financial advisors with an easy way to outsource investment management and research. While there are many benefits to using a TAMP, the three main ones are increased efficiency, lower costs, and improved risk management.
A TAMP helps advisors save time and increase efficiency by simplifying the investment process. Advisors outsource due diligence, portfolio construction, and ongoing monitoring to the TAMP provider, freeing up their time to focus on other important tasks, namely attracting and serving clients.
By consolidating multiple tasks into one platform, advisors save on administrative costs. TAMPs improve risk management through access to sophisticated analytics and reporting tools. This information can create customized portfolios that are designed to minimize risk while still meeting client objectives. In today’s volatile markets, TAMPs provide an important layer of protection for both financial advisors and their clients.
While a TAMP can be an extremely helpful resource, it's important to understand exactly what it is you're signing up for before committing. Here are four questions independent financial advisors should ask before choosing a TAMP:
- What is the TAMP's investment philosophy?
When it comes to investing, there is no one-size-fits-all solution. Different investors have different goals, risk tolerance levels, and attitudes. Choose a TAMP that fits your own investment philosophy. How does the TAMP approach investing? How does it handle risk? Once you have a better understanding of its investment philosophy, you can determine if it aligns with your firm. If it doesn't, then it's probably not the right TAMP for you.
- What is the TAMP's culture?
Understand a TAMP's culture to gauge whether it is a good fit. Some TAMPs have a very hands-off approach, while others are more involved in helping advisors construct portfolios that meet specific client needs. Find a TAMP that works collaboratively with you and your team and provides the support you need to grow your business. By understanding a TAMP's culture, you avoid conflicts and ensure that you're making the best decision for your firm and your clients.
- What is the TAMP's track record?
Experience is everything. After all, you're entrusting it with your clients' hard-earned money, so you want to be confident that the team behind it knows what they're doing. The first question to ask is how long the TAMP has been in business. A longer track record usually indicates a more experienced team. Additionally, ask about the TAMP's performance over the past few years, ideally over a full market cycle. This will give you a good idea of what to expect going forward.
- How is the TAMP innovating?
The financial world is constantly changing and evolving, which means that financial advisors need to adapt and change with it. Look at how it is innovating and adapting to the ever-changing landscape. Is it keeping up with the latest technology? Does it offer unique investment strategies that differentiate your firm? Is the team always looking for ways to improve the client experience?
Final thoughts
A TAMP is an excellent option for advisors who are looking to outsource investment management, lower costs and focus on other ways to improve the client experience.
While Equita is not considered a TAMP, we do offer the tools and resources that women need to thrive - including a community of like-minded female financial advisors. From marketing resources to succession planning, our goal is to help you grow your firm on your terms. Learn more about our community.
Bridget Grimes and Katie Burke co-founded Equita Financial Network out of a need to fuel business success while empowering other women in the financial services industry. Equita became the first platform solely focused on women-led financial planning firms, designed to encourage women to make the leap into launching their own practice and provide solutions to support them every step of the way. Equita is a way for like-minded women to not only share resources and run their business at an affordable cost, but to also share ideas on everything from best practices to help with questions regarding client issues.
Read more articles by Katie Burke, Bridget V. Grimes
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
