Fee-based discretionary portfolio management began with a handful of brokers in the late 1970s, but the approach was an oddity. Back then, who would want to do stock business any other way than get a commission for a great idea? Today, every wirehouse has a formal fee-based discretionary program (even fee-averse A.G. Edwards is developing one).
This is one of the fastest growing parts of our retail business, a way to monetize our research product, says Marshall Kaplan, director of the Portfolio Management Group at Salomon Smith Barney, Wilmington, Del.
Douglas Harman, manager of the Everen Portfolio Management program at Everen Securities in Chicago, sees a bright future for brokers who find a niche with the very wealthy. But the fee structure of the programs may have to be reduced to resemble the approach of independent investment advisers, he warns.
These programs are reaching critical mass, Harman says. Some of my senior portfolio managers are starting to bump into independent investment advisers on a regular basis.
Turn the page for a snapshot of some fee-based discretionary portfolio management programs and to meet participating reps.