Three key questions to consider

According to a recent nationwide survey of financial advisors[i], 88% of respondents choose to work with a Turnkey Asset Management Program (TAMP), so they can focus their time on attracting and retaining clients. As more and more advisors look to minimize the time they spend implementing investment portfolios, how do you know if a TAMP is the right solution for you? Here are 3 key questions to consider before making the move.

I am good at managing investments. Why would I outsource it?

There are three main reasons that an advisor might want to partner with a TAMP.

1. 1. Unpredictability: During the global pandemic in 2020, the markets dropped, and most advisors were forced to change their business models while connecting and assuring clients that they were in good hands. For those advisors that didn’t use a TAMP, they were also struggling to rebalance portfolios, research which ETFs or mutual funds to trade, while figuring out their asset allocations – all of which may have been done faster and more efficiently[ii] by a TAMP. When the market is volatile, advisors are forced to deal with the investments first, which takes a lot of time and focus away from their core planning work, and their ability to meet and communicate with clients.

1. 1. Focused & Fast Team Approach: TAMPs have an investment committee made up of team members who have the flexibility and focus required to quickly make changes and adjustments to the portfolio. This can be hard for an individual advisor to match. The advantage of a focused investment strategist team of a TAMP may significantly benefit a client’s returns. [iii]

1. 1. Position Yourself as a Consultant: If you were to manage your client’s money directly and you underperform, it’s hard to imagine a scenario where you wouldn’t be forced to defend yourself to try and save the relationship. By using a TAMP, you can distance yourself from the performance and help clients by finding a better investment strategist to meet their goals. By positioning yourself as the consultant who does the due diligence and makes recommendations to fix the problem, the relationship is less likely to take a hit.

How do I explain this to my clients? Don’t they expect me to manage their assets?

Clients will benefit from the extra time you gain by offloading the investment workload in the form of deeper client relationships and more diversified services. The extra bandwidth allows advisors to provide more holistic and focused financial planning that clients desperately want, like addressing their retirement, tax management, and estate planning concerns. In fact, by spending more time meeting and understanding your clients’ goals, you are in a much better position to exceed them.

How do I know which TAMP is right for me? 

Choosing to partner with a TAMP is an important step that deserves your time and attention. If you are trying to actively grow your practice, then building more time into your day to focus on your current clients while attracting new ones may be a deciding factor. Think carefully about what you would do with the extra time, how you would leverage your TAMPs services, and how your clients could benefit from this relationship. Here are some factors to consider when deciding which TAMP to work with:

• Does their investment philosophy match my own?
• What is their investment performance historically?
• What types of strategies are available?
• What auxiliary services do they offer to help me grow my business?
• What are their fees?
• How will the TAMP integrate into my other technology platforms and services?
• How do they support their advisors after a client is added to the platform?
• What does the setup process look like?

If you would like to learn more about how the right TAMP partner can support your firm’s growth, please contact us to discuss your business.