The greatest transfer of wealth in the history of mankind has begun. In the next three decades, $30 trillion in assets will move from one generation to the next in the US alone, and worldwide the figures are staggering. In our digital, 24/7-access world, this new generation of investors will see wealth creation through very different eyes. The old way of doing things won’t cut it anymore.
The platform landscape has evolved significantly over the past 25 years. In the early 1990s the Master Trust was the first platform structure to consolidate investment execution and reporting and simplify the investment experience. Next came wrap platforms, which facilitated broader investment choice (e.g. listed securities), broader overarching reporting across pensions and ordinary investment savings, lower investor costs, smoother fee collection and the introduction of model portfolio functionality.
While well intended, having model portfolios on wrap platforms starts to push administrative tasks out to advice businesses, negating some of the inherent efficiencies of wraps. One of the biggest offenders is the requirement for individual client consents for bulk investment changes.
Praemium enables the outsourcing of portfolio management and administration tasks via Separately Managed Accounts (SMA), which allow wealth managers to implement strategy changes across a number of client accounts simultaneously, reducing administration and ensuring all clients are treated equitably. SMAs have since become one of the fastest growing investment solutions worldwide due to the inherent efficiency, transparency and cost benefits for investors and efficiency gains for advice businesses.
Because of the obvious advantages, many wrap platforms have attempted to tack on SMAs. Unfortunately, the technology requirements for running non-unitised, actively managed discretionary investment portfolios are fundamentally different to wraps, which are essentially investment administration services.
All platforms are not the same. To provide investors and their advisers a great investment experience requires a truly next-generation investment platform, one that was built with Managed Accounts at its core. A great Managed Accounts platform will include: simple and consolidated reporting of all investment assets; broad investment choice with ease and flexibility to make changes; tailored solutions for every kind of investor; digital portals for advisers and investors; administrative accuracy and efficiency; and the benefit of platform scale in the form of very competitive fees at all levels.
For the past 18 months Praemium has been working on a program of client engagement that has translated into a major upgrade to our integrated Managed Accounts platform, which now includes Separately Managed Accounts and Individually Managed Accounts. Praemium is the next generation in platform technology.
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