Americas Best TAMPS 2024 - 45

2024 AMERICA'S BEST TAMPS
optimization, portfolio customization and
operational efficiency.
* Distributed Overlay vs. Centralized
Overlay: Distributed overlay (e.g.,
Smartleaf) allows a relationship manager
or trust officer to set up individual rules
to manage individual client accounts.
Centralized overlay decisions are made at
the firm level, and asset managers tend to
be more comfortable with releasing their
models under this type of process.
PLATFORM
Refers to both the underlying investment
management technology the advisor uses,
and the investments available to offer clients.
Both aspects of the platform are provided to
the wealth advisor by the TAMP, providing
the outsourced investment solutions.
PRIVATE BRANDING/WHITE LABELING
A TAMP's platform may be branded to
identify with the wealth advisor's firm as
opposed to the actual developer or provider
of the technology or system.
PROPOSAL GENERATION
Either a process or onboarding step
wherein the advisor presents the client with
an appropriate asset allocation model or
investment policy statement, customized
to their specific situation, in order to get the
prospect to make a decision to become a
client of the firm.
REBALANCING
The rebalancing of an investment portfolio
is the action of bringing a portfolio that has
deviated away from its target asset allocation
back into line. Now underweighted securities
can be purchased with sales of the now
overweighted securities. Rebalancing can
be automated on the investment platform
at either the account or household level, or
across all the advisor's accounts. Advisors
and firms must select the time period at
which rebalancing will be done, and may
rebalance a portfolio to meet clients' specific
needs to harvest tax losses, minimize capital
gains taxes, or adhere to updated asset
allocation restrictions or preferences.
REPORTING
Stating the results of clients' investment
portfolios is one of the most important
aspects in attraction and retention of clients.
Good reporting systems and capabilities help
the client understand the value added by
their advisor, no matter the actual underlying
performance of specific investments.
Reporting may be conducted at the account,
sleeve or household level.
* Best reporting practices require
" attribution reporting " where results are
compared to a benchmark, and the asset
manager's performance can be adjusted
for general market gains, risk and style
drift so the client can ascertain the exact
value-add of each manager.
RETURN 1 YR
A return, also known as a financial return,
in its simplest terms, is the money made or
lost on an investment over the most recent
1-year time period.
RETURN 3 YR
A return, or a financial return, is the money
made or lost on an investment over the most
recent 3-year time period.
SEPARATELY MANAGED ACCOUNT (SMA)
A portfolio of individual securities, managed
by a single asset manager, matching some
aspect of the client asset allocation strategy
and offered to the investor by a sponsoring
firm. A fee-based SMA program utilizes
multiple SMAs. A single SMA can also form a
single sleeve within a UMA structure. SMAs
also differ from mutual funds because the
investor directly owns the securities instead
of owning a share in a pool of securities.
SHARPE RATIO
Developed by Nobel laureate William F.
Sharpe, this is one of the primary risk metrics
used to evaluate the value a given manager
contributes to the investment experience. It
compares the model's return to the amount
of volatility managers will accept in order to
deliver above-market performance.
STANDARD DEVIATION
A statistical expression in portfolio evaluation
that measures the consistency of returns
over time. Higher standard deviations
suggest a more scattered or " bumpy "
investment experience.
SLEEVES
Each portion of a client's total portfolio
managed by a single asset manager is
considered a " sleeve " on the UMA platform.
Each sleeve fulfills some part of the asset
allocation selection. Sleeves may be created
for each asset class (whether traded, as with
ETFs, or non-traded, as seen with real estate
or alternative investments) or an individual
investment manager, asset type (e.g., mutual
funds or SMAs), model or investment strategy.
TM
* Rep-as-Advisor Sleeves are specific
sleeves put together by the investment
advisors themselves to conduct a specific
strategy of their own design.
TAMP
A Turnkey Asset Management Program
(TAMP) provides outsourced investment
selection and management, allowing
the wealth advisor to offload timeconsuming
back-office functions such as
research, manager due diligence, portfolio
construction, rebalancing, reconciliation,
performance attribution, tax optimization and
reporting. TAMPs help advisors focus more
of their time on gathering assets, acquiring
new clients, and servicing existing accounts.
TRACKING ERROR
Tracking error is the divergence between the
price behavior of a position or a portfolio and
the price behavior of a benchmark, reflecting
the difference between the return an investor
receives and that of the benchmark they
were attempting to imitate.
UNIFIED MANAGED ACCOUNT (UMA)
A single fee-based account that houses
numerous investment products to fulfill
the client's asset allocation strategy
within multiple separate account sleeves.
Management between sleeves is determined
by the overlay process to gain tax and
trading efficiencies. This requires the wealth
advisor to manage the client relationship
on a platform optimized for UMAs. A UMA
is usually conceived as having a single
custodian, though some platforms do
aggregate across multiple custodians.
UNIFIED MANAGED HOUSEHOLD (UMH)
A UMA-like relationship taken to the next
level by bringing together all aspects of a
client household's wealth, not just the wealth
of the separate individuals. UMH platforms
enable program sponsors to take a holistic
approach to their investors' total portfolio,
and apply a range of solutions that treat the
client's wealth in a manner similar to how
clients think about their personal wealth.
Assets to be managed include qualified and
nonqualified accounts, as well as real estate,
collectibles, oil and gas properties, limited
partnerships and managed futures accounts.
A UMH has a single registration, and can
aggregate across multiple custodians.
Many advisors consider the UMH to be the
ultimate advancement in the managedaccount
space.
45
Americas Best TAMPS 2024

Table of Contents for the Digital Edition of Americas Best TAMPS 2024
