Trust companies and other financial service providers looking for a way to keep their clients happy and even cultivate new ones are finding it in the sweet spot between third-party portfolio management and high-tech account structures, says GlobalBridge CEO Kelly Coughlin.
“We firmly believe that this combination will, if used well, result in higher net profits,” he explains.
The problem is that until now, there was no concise guide out there to describe exactly what “overlay management” — the third-party investment strategies — and unified managed accounts (UMAs) do on their own, much less in combination.
We profiled Minneapolis-based GlobalBridge a few months ago. Since then, Coughlin’s team has been working overtime to develop a marketing platform that eliminates the jargon while spotlighting that sweet spot.
The first fruits of their labor debuted today at the ABA Wealth Management & Trust Conference in Miami Beach, where Coughlin and several other members of the GlobalBridge brain trust are staffing exhibitor booth 516.
“Unified Managed Accounts Made Simple” is unique in the industry for doing exactly what it sets out to do: describe what companies like GlobalBridge do and what the value is for banks, trust companies, broker-dealers and RIA firms that sign up. (Get a free copy HERE.)
Inside the Integrated UMA
A lot of firms are at the ABA conference showing off their overlay solutions. Even giants like Citi have entered the arena with new tweaks to their OpenWealth platform, which now integrates trust accounts into its overall view of each client family’s sometimes far-flung assets.
But to pare it all down to basics, overlay management is really a business process, Coughlin says.
Companies that join an overlay platform get access to best-of-breed wealth managers’ security selection and trading strategies — their “portfolio recipes” — and can then “overlay” or replicate the recipes in their own clients’ accounts.
These accounts are structured as UMAs. The back-office systems that give overlay managers the ability to monitor, adjust and support the UMAs are a technological solution, Coughlin says.
“A lot of providers offer some version of what they call ‘overlay management’ or a ‘unified managed account,’ but really lean one way or another,” he explains.
“The problem is that both categories have been thrown around so much that the terms have become practically meaningless.”
GlobalBridge cuts through the haze by branding its combined overlay UMA offering as the Integrated UMA.
It’s in the “integration” of the two that makes the GlobalBridge solution really interesting.
For one thing, the company’s UMA platform goes far beyond old-fashioned separately managed accounts in the sheer variety of asset classes and strategies it can handle.
And with the proprietary “three-dimensional” asset allocation model built into the platform, alternative assets are not only allowed but practically accepted as the 21st-century default — and truly integrated with conventional stocks and bonds to give advisors a real diversified portfolio, draw-down risk management, and dependable returns – thus the 3 D.
As a sample, GlobalBridge also culminated 10 years of work by unveiling five pre-optimized 3-D portfolio strategies today. These overlay portfolios — focusing on core, income, growth & income, global balanced and growth strategies — use the top managers on the platform and as the company points out, “back testing has generated extremely impressive results.”
Separating the wheat from the chaff
GlobalBridge also prides itself on the due diligence with which it vets every manager on the platform. This frees fiduciaries in particular from a lot of the cost of manager selection by ensuring that every name that comes up on the screen truly is “best of breed.”
The company extends that care to the financial firms it chooses to work with, Coughlin says.
Instead of chasing every bank or broker who comes calling, GlobalBridge performs thorough due diligence on would-be partners.
“If we identify there is a need and a match for our services, we pursue the relationship,” Coughlin explains. “Otherwise, if we can’t deliver what they need, we won’t waste their time..or ours.”
The courting process can take months because these relationships are more like marriages than short-term vendor partnerships.
“We want to build our business around clients that enjoy and have mutual respect with us, and each of us wants to make sure the other is getting value,” Coughlin says.
“If it’s a mutual thing, we all benefit and it’s going to be a very good long-term relationship. If it’s all about who can do it the cheapest, it may not be a good fit for anyone.
GlobalBridge has lined up a “backstage pass” tour of their platform — basically a VIP test drive — for those who want first-hand insight into the benefits of an Integrated UMA approach.
Less pain, more gain
Naturally, being able to tell a client that you have the best investors in the world pumping ideas into his or her portfolio is a huge competitive advantage.
Clients won’t be tempted to flee to the next hot manager setting up shop and it can even be a differentiating factor with which you can lure prospects.
As Coughlin notes, institutional and high-net-worth clients alike are already fleeing the wirehouses, so this is an opportunity.
Meanwhile, Coughlin mentioned it last time, but it bears repeating. Overlay management lets a financial institution outsource non-core functions — wealth management — to the experts, saving money and refocusing on core expertise.
Your in-house investment managers can focus on the value-added specialties your clients already appreciate, without having to stretch or buy their way into generic or crowded strategies.
And the trust officers themselves can get back to the job of managing relationships with grantors and beneficiaries, instead of trying to manage money.
Scott Martin, contributing editor, The Trust Advisor Blog. Jerry Cooper and Steve Maimes contributed to the editing and research.
