More financial advisors are learning the ABCs of TAMPs

A sharply growing number of financial advisors are outsourcing their asset and investment management to third parties, often referred to as “turnkey asset management programs,” or TAMPs.

According to a recent study by Tiburon Strategic Advisors, TAMPs— which provide technology platforms, investment products or a combination of both — have experienced dramatic growth. Since 2011, TAMPs have gone from less than $147 billion in assets (under management or administration) to $1.75 trillion in 2015.

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Some 36 companies dominate the market, and approximately 25 percent of advisors are now outsourcing to TAMPs, according to Tiburon.

Steve Onofrio is head of sales for SEI, one of the largest TAMPs, which provides investment management, asset administration, custody and practice administration. He suggests several drivers behind the recent 1,000-plus percentage growth in TAMP usage:

Advisors are fatigued, trying to meet market demand and find more time with their retiring baby boomers and new clients. They want a professional organization to put together portfolios and other services for them.There has been a huge explosion in new technology, which can be provided by third-party platforms.Larger advisors are outsourcing more services now, as a money-saving option, instead of hiring more employees.

“Something’s got to give” for overwhelmed advisors, Onofrio said. “They’re required to know about a lot of things, and there’s less value in doing other than financial planning when there are so many providers of investment management out there.”

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This describes the experience of certified financial planner Robert Wander, of Wander Financial Services, who has used AssetMark for the past 10 years for services such as investment due diligence and selection for different strategies and asset classes.

“It became very difficult to focus on too many things,” Wander said. “Not having to concentrate on investment selection and management allows me to be more focused on financial planning.”

“Having the resources of a large firm allows me to compete with the wirehouses,” he added.

Kathleen Longo, CFP, began working with BAM Advisor Services two years ago when she struck out on her own. Longo, now founder and president of Flourish Wealth Management, saw it as an opportunity to deliver the same level of services without needing to recreate the infrastructure of the large registered investment advisory firm she left.

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Longo appreciates the TAMP’s support with client-focused wealth management tools, compliance, back-office services, practice marketing, cutting-edge technology, client and practice education, and access to thought leaders.

“From the clients’ points of view, they see these larger resources,” Longo said. “You have a compliance team, investment team, bond team.

“Clients are seeing great deliverables, like reporting, explanatory materials, studies,” she added. “They ask: ‘How do you have all this together as a new firm?'”

Both Longo and Wander at Wander Financial Services emphasize the value a TAMP delivers regarding continuity planning. They know that if something happens to them, as solo practitioners, the TAMP will continue to manage their clients’ accounts and work with them to transition to new advisors.

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Herb White, CFP, started to transition the practice he founded, Life Certain Wealth Strategies, toward outsourced investment management over the past few years, allocating all new client money to be managed by TAMPs. He works with Brinker Capital, AssetMark and SEI.

“After my firm became a certain size, I found that I could provide better value by communicating more with clients and hiring and managing an outside manager,” said White, president of Life Certain.

In vetting outside investment management firms, White visits the headquarters to meet key individuals.

“Client service to me is important,” he said. “I look at their selection process, their methodology.

“An advisor must ask, ‘Does the TAMP platform align itself with a particular client’s investment strategy or goals on a fee-adjusted basis?'”
-Douglas Boneparth, partner at Longwave Financial

“What rigor do they apply? Is there any potential conflict of interest? For example, with separately managed accounts, I ask, ‘Why do you pick the stocks you pick?’ With mutual funds, I’ll ask, ‘Are you selecting funds that the fund manager is invested in?’ and ‘What are the fund’s stewardship attributes?'”

Douglas Boneparth, CFP and partner at Longwave Financial LLC, would rather keep all investment management in-house.

“TAMPs add fees,” he said. “I can do the same or better with my own technology, and I don’t need my clients picking up an additional expense.

“And if my staff implements the investment management, there are no limitations — it’s ‘open architecture,'” he added.

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“An advisor must ask, ‘Does the TAMP platform align itself with a particular client’s investment strategy or goals on a fee-adjusted basis?'” Boneparth said.

The added expense is worth it to Wander.

“I’m sharing a significant amount of revenue with [the TAMP company],” he said. “I’m netting less but providing economies of scale for my clients.

“Delivering a better solution helps attract more assets,” Wander added. “It’s helping me to grow my business and giving me more time.”

— By Deborah Nason, special to


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