In a recent interview with Wealth Advisor, UX Wealth's Head of Trading, Billy Kropp gave insight into how a select group of RIAs are constructing their own investment models and five important factors to consider.
In a recent webinar by Cerulli Associates, it was surprising to learn that nearly 70% of assets are managed under the Rep as Portfolio Manager structure, where advisors actively construct and make allocation decisions for client portfolios. Many of these advisors use ETFs as foundational components to create their internal models, which are then allocated to client accounts.
As the Head of Trading at UX Wealth, I have led efforts to design our technology platform in a manner that simplifies this entire process for advisors. Whether you are currently constructing your own investment models or contemplating it for the future, there are several important factors to consider.
Valuation (Building Your Own Track Record)
As business owners, many advisors are consistently seeking strategies to optimize the value of their businesses. One approach is transitioning your financial planning practice into an asset management firm. Historically, asset managers with verified track records have achieved higher multiples compared to financial planning practices. The inclusion of a live track record that is validated and certified as compliant significantly enhances the valuation. At UX Wealth, we provide comprehensive support for all documentation requirements necessary to certify your track record, simplifying what is typically a rigorous and time-consuming process for advisors.
Distribution (Marketing Your Models to Other Advisors)
Many advisors boast an impressive track record in model management and aspire to explore how their models could benefit fellow advisors across the country. The demand for outsourced model management continues to surge, and you may possess a strategy that resonates with advisors and would be a valuable addition to their offerings. We've observed that many exceptional model managers share a common challenge: getting their strategies in the hands of other advisors. UX Wealth received a nomination for Model Marketplace of the Year, and advisors nationwide utilize our platform to discover exceptional asset managers. We have a remarkable track record of curating outstanding managers and showcasing their investment models to the broader industry. Let us handle the distribution while you focus on what you do best.
Mitigating Your #1 Risk
Successful businesses excel at managing business risk, and one of the top risks in your business will always be associated with trading errors. Citing a report on their website, the law firm Golson Scruggs found that trade error claims increased by 500% during the period of March to May 2020, compared to the same period in the previous year. Navigating the right policies and procedures is a daunting task, and attempting to execute these procedures properly can seem like an exercise in futility. It appears that every week, regulators are increasingly stringent on issues such as incorrect trade executions, unfair trade allocations, and trading-related compliance errors. At UX Wealth, we have designed one of the most sophisticated trade technologies that covers all bases for advisors. We have also priced this service very competitively, making it a compelling choice for advisors seeking both adoption and protection.
Billing and Reporting
We have observed that many advisors struggle with billing and reporting, prompting us to make it a cornerstone of our support services. This often-overlooked aspect of asset management can significantly impact client relationships, revenue, and cash flows, and it can lead to audit and compliance challenges. The ability to adapt to continuous compliance regulations and manage vast amounts of data from various systems and sources is crucial. Advisors are increasingly turning to UX Wealth to outsource these vital back-office tasks. In doing so, they gain simplified control over the timing, consistency, and calculations of their custom fee structures.
Time Management With Less Stress, Embracing Technology
Source: Cerulli Associates
Change can be challenging, which is a key reason many advisors continue using their legacy trading, billing, and management systems. However, the evolving landscape of compliance and risk management necessitates considering change. We at UX Wealth have designed an easy and cost-effective solution to keep advisors a step ahead. According to a study by Cerulli Associates, larger AUM practices increasingly leverage technology to grow successfully. If advisors aim to scale their businesses, embracing technology becomes essential. UX Wealth Partners offers the tools and support to facilitate this growth. If you're acting as a portfolio manager for your client's portfolios, it's crucial for your business to explore how UX Wealth can enhance your value proposition.
To truly understand how UX Wealth Partners can enhance your client outcomes, I invite you to continue the conversation with us. We’ve only just begun to explore the depth of our capabilities...
