A Turnkey Asset Management Program (TAMP) offers a more efficient way for financial advisors to manage their client's assets. It allows advisors to delegate specific tasks, enabling them to allocate more time and resources to other duties. For instance, a TAMP may take over responsibilities such as reporting and accounting, allowing the advisor to focus on attracting new clients or assisting existing clients in refining their financial strategies.

TAMPs can also assist financial advisors with due-diligence responsibilities. These include investment research and selection, portfolio rebalancing, and enhancing tax efficiency. Advisors pay a fee for these services, typically calculated as a percentage of the total assets they manage with the firm.

The Five kind of TAMPs

TAMPs can operate using six fundamental models, each with its unique features:

Mutual fund wrap accounts: These accounts provide multiple mutual funds. The fees encompass all the client's mutual fund trading activities, allowing the advisor to customize a mutual fund portfolio tailored to the client's investment objectives.

Exchange-traded fund wrap accounts: Similar to a mutual fund, but the investment options are restricted to exchange-traded funds. These cost-effective ETFs result in slightly lower fees compared to traditional mutual fund wrap accounts.

Separately managed accounts (SMA): Designed for investors with a higher amount of investable assets, an SMA operates similarly to a mutual fund but with one key difference - all investments in an SMA are owned by a single investor.

Unified managed accounts (UMA): UMAs hold various investments in separate "sleeves," each managed to maximize return potential and tax efficiency.

Unified managed household (UMH): Ideal for managing assets for multiple individuals within the same household. Generally, high net worth and ultra-high net worth families use this type of account.

The Advantages of TAMP for Advisors

TAMPs primarily benefit advisors by freeing up their time to concentrate on activities directly related to serving their clients better, potentially resulting in increased profitability. They also save money as advisors avoid the substantial investment needed to establish an in-house management team. TAMPs also simplify the process of managing multiple client accounts in one place.

The Impact of TAMP on Your Investments

If your advisor uses a TAMP, you might wonder how this affects you. It's crucial to understand how this might affect the fees you pay and how the TAMP's investment strategy aligns with yours. It's recommended to review your advisor's fee schedule and discuss any potential conflicts of interest that might exist within the TAMP's investment selection process.

Investment Tips

A financial advisor can help you formulate a financial plan to meet your investment objectives. Consider how TAMP costs, passed onto you as part of their advisory fee, might affect you. Evaluate the benefits you might gain in terms of your investment performance and consider the quality and level of service you receive from your advisor. Then, decide whether these justify the additional costs.

A TAMP can assist your financial advisor in managing your assets more effectively. However, it's essential to understand what advantages or disadvantages this might offer you. Discuss it with your financial advisor to see if it suits your needs.

At RetireBetter, we provide the tools to help you and your advisor navigate these decisions and ensure your financial future is secure.

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