Multiple Discipline Managed Accounts

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May 13, 2006 12:51 am

MS has a program where you can use several SMAs in 1 account.  All are outside managers.  Basically, you pick the allocation you want, you select with manager, ETF, or mutual fund goes in each category and you let it run.


I assume Merrill, Smith Barney, and Wachovia have something similar. I'm wondering who has the best platform since I do a lot of business on this platform as well as mutual fund wrap.

May 13, 2006 9:20 am

You cannot do that at Merrill.

May 13, 2006 11:41 am

For once, MS is ahead of the rest with the Unified Managed Account.  I'm sure the rest will follow soon but it's nice to be in the lead for once.

May 13, 2006 4:02 pm

Smith Barney launched this program last month and have had a proprietary MDA product for years

May 13, 2006 7:10 pm
dividends:

Smith Barney launched this program last month and have had a proprietary MDA product for years


We've had the proprietary version for years as well, but our managers we're that great.  The newer version was released about 18 months ago and my clients love it. 


What's the story with the MDA at SB and the track program i've heard about?

May 15, 2006 8:50 pm

I love the idea!  

May 16, 2006 9:12 pm
iconsult100:

MS has a program where you can use several SMAs
in 1 account.  All are outside managers.  Basically, you pick
the allocation you want, you select with manager, ETF, or mutual fund
goes in each category and you let it run.


I assume Merrill, Smith Barney, and Wachovia have something similar.
I'm wondering who has the best platform since I do a lot of business on
this platform as well as mutual fund wrap.





I asked a rep that just transferred from MS, and they disputed this
acount structure.  She told me there is an account where you can
selct from a group of managers in size and style categories and hold
them in 1 account in accordance with a set allocation
percentages.  ETF's and Mutual Funds?  She said no.  Am
I mis-informed?

May 16, 2006 10:09 pm
rightway:
iconsult100:

MS has a program where you can use several SMAs in 1 account.  All are outside managers.  Basically, you pick the allocation you want, you select with manager, ETF, or mutual fund goes in each category and you let it run.


I assume Merrill, Smith Barney, and Wachovia have something similar. I'm wondering who has the best platform since I do a lot of business on this platform as well as mutual fund wrap.




I asked a rep that just transferred from MS, and they disputed this acount structure.  She told me there is an account where you can selct from a group of managers in size and style categories and hold them in 1 account in accordance with a set allocation percentages.  ETF's and Mutual Funds?  She said no.  Am I mis-informed?


You are. She's giving you dated information. Either she left more than 4-6 weeks ago or she rarely used the PPA program. It continues to evolve even further.

May 22, 2006 5:29 pm

How much do they charge for this account all in?

May 22, 2006 6:31 pm

2.25% maximum fee in addition to the ETF's and mutual fund's inbedded expense ratios.  Most are discounted below the maximum fee.

May 22, 2006 6:51 pm
Lance Legstrong:

How much do they charge for this account all in?


My team has been told that we are too cheap.  We charge between 1.50% and 1.75% (including expense ratios).  There are breakpoints also.

May 22, 2006 6:55 pm
MWD123:

2.25% maximum fee in addition to the ETF's and mutual fund's inbedded expense ratios.  Most are discounted below the maximum fee.



Check out the new pricing info, ETF and fund management fees are rebated.

May 23, 2006 7:24 pm
mikebutler222:

Check out the new pricing info, ETF and fund management fees are rebated.



That's an outright lie.  The cost for the ETF or mutual funds is about 30bps.  Then MS charges 20bps.  Then the broker charges whatever he wants.  Typically the TOTAL COST to my client is between 1.50 - 1.75%, but it could be higher depending on was the broker is charging.

May 23, 2006 10:05 pm
iconsult100:
mikebutler222:

Check out the new pricing info, ETF and fund management fees are rebated.



That's an outright lie.  The cost for the ETF or mutual funds is about 30bps.  Then MS charges 20bps.  Then the broker charges whatever he wants.  Typically the TOTAL COST to my client is between 1.50 - 1.75%, but it could be higher depending on was the broker is charging.



That's not a lie, outright or otherwise (maybe bad wording on my part, though). Here's the comment I was responding to;  2.25% maximum fee in addition to the ETF's and mutual fund's inbedded expense ratios.


Under the new pricing, the account fee is not "in addition to" expense ratios. The schedule is a tad complicated, in three parts, and I should have chosen my words better, but the point I was trying to make was that the imbedded expense ratios are taken into account and not duplicated, as they so often are in other accounts.


To the three part fee; for example, you're correct, MS tacks on 20 bps (imho they shouldn't. Taking 60% of the production should be enough, they don't need to take a cut beyond that) the broker adds his fee (the amount you mentioned is good) and then the SMA manager gets 30-50 bps (don't recall off the top of my head exactly). If there's no SMA because it's a MF or ETF, that imbedded fee is paid as it would be in any sort of account, out of the MF or the ETF itself. It’s not like some accounts where the client pays the same fee to the firm if the account holds a stock, and ETF or a mutual fund, thereby creating a situation where a client can find himself paying 2% on top of a 1.65% mutual fund management fee.


I hope that clears up any confusion I caused, but I have the feeling I may have made it even worse.



May 23, 2006 11:36 pm

No problem MB, the word "rebated" got me going.  I know the platform inside and out.  I love it.  PPA and Fund Solution are the only things keeping me here.


I think it total BS that MS charges the 20 bps and then keeps 60% of the advisors' cut too.  I ripped into some regional guy about 4 years ago over that when I found out they were doing it.  We were always told that the money managers got 50 bps, when they were only getting 30-40 and MS was pocketing the rest.