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How Fortigent got $50 billion on its platform by treating an RIA pain-point

The Rockville, Md.-based company was early in the high-end of the market but other outsourcers are catching on

Monday, September 12, 2011 – 1:51 PM by Lisa Shidler
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Scott Welch says his company's success can be attributed to putting manager research and reporting under one roof.

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July 23, 2020 – 1:42 AM

Dynasty Financial hires 'real deal' TD Ameritrade RIA sales talent who left after Schwab deal; he'll again mine for RIAs on Florida's Gold Coast--first big news since IPO disclosed

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Mentioned in this article:

Tiburon Strategic Advisors
Consulting Firm
Top Executive: Charles Roame

Envestnet Inc
TAMP
Top Executive: Jud Bergman

SEI Advisor Network
TAMP
Top Executive: Wayne Withrow




Elmer Rich III

Elmer Rich III

September 12, 2011 — 2:23 PM

Always best to meet demand. Rarely a good idea to try and create it. Good story.

Jeff

Jeff

September 12, 2011 — 3:28 PM

Fortigent is the ONLY and the best firm that services high end RIAs.

I view them as a flexible partner not a TAMP.

Lisa Shidler

Lisa Shidler

September 12, 2011 — 3:34 PM

Hey Jeff, Great comment about not seeing them as a TAMP. We had a number of editorial meetings about that topic. It’s very clear that the company is different than a traditional TAMP but also does provide some of the services as a TAMP.

Jeff Fang

Jeff Fang

February 14, 2012 — 7:35 PM

I’m an emerging RIA firm looking for a firm that is “different than a traditional TAMP”. Who are the players, of course, other than Fortigent.

Brooke Southall

Brooke Southall

February 14, 2012 — 7:53 PM

Hi Jeff,

I suppose it depends on how you would like them to be different. But the good news is that there are quite a few out there that have slightly different niches. Here’s a list of several: http://www.riabiz.com/d?cat=63403 If you click on any of the TAMPs on our list, it’ll take you to articles we’ve written about them.

I hope that helps.

Brooke

P.S. I noticed that the biggest of the TAMPs, SEI is not on the list I linked you to.

Jeff Fang

Jeff Fang

February 14, 2012 — 8:40 PM

Thanks so much for the quick response.

It apears that what I’m looking for is not really a TAMP, but more of an outsourcer that focuses on the low value-add mechanics all RIA have to contend with. I’ve looked at Adhesion Wealth and the info on the websites hits the right notes. Interestingly, an interview I saw of an executive there did not. When asked the question touching on the common subject of whether advisors add value in selecting securities (and implied asset allocation), the exec responded along the lines of: well it’s likely that more qualified (i.e. highly competent, CFA-type) investment management firms probably adds more value than the typical advisor can, so advisor can and should focus more on client relationships and biz dev.

Truth is I really don’t like that answer. I prefer his answer would be something like we’re agnositic to the “alpha” proposition of a TAMP, but where we do add value is really about operational efficiency such as implentation of a advisors model portfolio (rebalancing, tax trades, overlay, etc) or using one of our own, reporting, billing, analytics, manager search (no matter if that means TAA, SAA, nine boxes, Alt mgrs), tech consulting, etc.

UMA maybe closer to my search than a TAMP.

Comments?

Alex Potts

Alex Potts

February 14, 2012 — 10:34 PM

Jeff, there are a handful of technology only TAMPS, but I’d say one of the largest value added components of utilizing a TAMP is being part of an advisor community. Ultimately, learning best practices from your peers, AND the firm should help you in your business. We find the greatest value advisors add to their clients is helping them construct and mainintain their wealth plan (not simply chasing asset class alpha). At Loring Ward, we have a distinctive investment methodology and ways to help advisors work with their clients, however there are some tamps who are investment agnostic and can bring the traits above to advisors. I hope this helps!

Michael Stier (Adhesion)

Michael Stier (Adhesion)

February 15, 2012 — 7:11 PM

Jeff – First, thank you for the positive mention. Your fundamental question is a good one, though it’s getting a bit tangled in the jargon. A TAMP is basically a service provider while a UMA (unified managed account) is essentially a construct for organizing investment vehicles in an account. Some TAMPs incorporate a UMA delivery vehicle in the services they offer, some do not. And, not surprisingly, there is a fairly wide spectrum in the breadth, depth and value of investment services offered in conjunction with the UMA structure. You started your post by focusing on the types of services you need for your practice, which the right way to approach your search.

With regard to your observation of the services provided by Adhesion, allow me to expand upon that just a bit. We’re an investment management service provider that is often assigned the “TAMP” label as a matter of convenience. So be it. The unfortunate thing about labels is that their interpretation is highly dependent on the readers’s historical frame of reference. Perhaps more accurately is to view Adhesion as an outsource partner in the delivery of investment services to an RIA’s clients. Our role is essentially that of an “investment management hub” that facilitates your mission as your clients’ CIO, enabling you to assemble and monitor teams of specialists to achieve the game plan you laid out. We provide the centralized hub that makes it easy to implement/ coordinate the services provided by each specialist. When referring to specialist roles we generally think in terms of:

Strategist– Developing asset allocation strategies, based upon assessment of the economic environment, global capital market factors and relative, risk-adjusted return expectations from the various sectors and classes. Incorporates the strategist’s philosophy regarding portfolio construction (e.g., TAA, SAA, Core-Satellite, ...) and risk management through effective diversification. Also performs the extensive research required to determine the best combination of managers/ products with which to implement the strategy components from the tens of thousands available. Provides the client-suitable and fiduciary documentation of the process, research results, strategy components and historical return stats.

Managers – The use of specialists for security selection is already well established with any advisor that utilizes funds in client accounts. With UMAs as the delivery vehicle, utilizing a manager’s model portfolio instead of a fund (for appropriate asset classes) enables the tax overlay management you mentioned in your post as one of the value added functions, as well as often a lower total cost.

Overlay Portfolio Manager – As you noted in your post, this is Adhesion’s value-added role, providing advanced technology and portfolio management expertise to the implementation of the advisor’s investment strategies (e.g., rebalancing, trading, portfolio accounting, electronic trading and reconciliation with custodian and executing broker-dealers, achieving best available executions, tax overlay management, coordinating and implementing manager changes to model portfolios, coordinating and implementing allocation reweights and manager/ product replacements, cash management, respecting client-specific restrictions and mandates, client/ performance reporting,...).

As the advisor’s outsource partner, Adhesion’s role is to facilitate the advisor’s approach to assembling this team of specialists. A number of our advisor clients provide the Strategist role internally; others utilize a 3rd party specialist. Some incorporate proprietary model portfolios with which to implement certain portions of the asset allocations while others solely utilize 3rd party manager products. Adhesion is completely agnostic to these choices made by the advisor, solely concerned with providing expert, value-added implementation and facilitating the incorporation of 3rd party managers and strategists as selected by the advisor (“the hub”).

Apologies if this reply was a bit long winded. I hope the clarification helps, and answers your question. If you’re interested in learning more about how our services may provide value to your practice, one of our sales/ consulting execs would be happy to speak with you. Completing the Contact form on our web site is probably the easiest path to get this started.

Best regards

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