Administration April 7, 2008

Report Chronicles Managed Account Transition to Advice Focus

July 28, 2006 (PLANSPONSOR.com) - Plan sponsors in the market for managed account services will find a new movement among providers toward concentrating more on the quality of the advice being offered than on the vehicle through which that advice is delivered.

Reported by

Fred Schneyer

That was a key conclusion of a new research report by Cerulli Associates about the state of the US managed account industry, according to a Cerulli report summary.

A key trend analyzed by the Cerulli report: how the qualities of existing programs will transition into vehicle-neutral, or what Cerulli refers to as “unified managed account (UMA),” environments.

” The product that managed accounts offer is advice. This is the mantra that inspires the industry’s momentum toward vehicle-neutral, next generation platforms,” the Cerulli researchers asserted in the report. “As distractions mount and initiatives with all kinds of bells and whistles are introduced to the market, it is important to keep the goal in mind. The purpose of creating a product-agnostic environment is to liberate existing managed account programs from their vehicle bias, and place the focus on delivering advice as the product.”

Another trend tracked by Cerulli is the practice of assigning specialized advisors by virtue of their particular knowledge area. “Advisor segmentation is key, and proactive managers are differentiating by supporting sponsors with advisor-specific seminars and educational materials,” the report said.

The report continued: “Managed account platforms offer a way to deliver advice in a systematic and scalable framework. The objective is to strike a balance between offering customization and solutions that meet the specific needs of each client, while achieving this complexity through a repeatable process.”

Cerulli also took note of the ongoing trend toward educating participants how to most prudently draw down money from retirement savings after leaving their jobs in addition to how to save for retirement. “Advice delivery through managed accounts has drawn more attention recently as firms look for systematic solutions to the retirement income puzzle,” the report said. “The next-generation vehicle-neutral environment will foster application of distribution investments such as insurance and annuities.”

A report summary and ordering information is at http://www.cerulli.com/pdfs/2006_State_of_Managed_Accounts_Info_Packet.pdf .