Unlike Robos, Do TAMPs Favor FAs Over Clients?
The key difference between turnkey asset management programs and advisor-facing robo platforms is that TAMPs let advisors collect additional fees for services normally done by in-house staff at no additional cost, Bob Veres writes in Advisor Perspectives.
TAMPs turn advisors into asset gatherers, taking them out of asset management, according to Veres, a consultant to the wealth industry.
By contrast, robo-advice platforms such as Advisor Engine, Jemstep and Betterment Institutional provide tools to automate work previously done by hand, which means advisors are still involved in asset management, he writes.
With institutional robos, advisors still design and monitor portfolios, while TAMPs essentially mean a delegation of those duties, according to Veres.
Where all this matters is fees, he writes.
An advisor using a TAMP reduces overhead but provides the same service to clients that they would have received from in-house staff doing portfolio management — except clients now pay an extra fee to the advisor for gathering the assets, according to Veres.
Robos, meanwhile, replace labor-intensive activities such as rebalancing, reporting and tax-loss harvesting, while the advisor is still involved with managing portfolios, he writes.
TAMPs also allow unscrupulous advisors who previously sold high-commission products to switch over to selling the TAMP’s managed-account services and charge a flat fee for their advice services while the TAMP charges an extra percentage of assets for portfolio management and reporting, according to Veres.