Salomon Smith Barney was the nation's largest distributor of managed accounts last year, according to a Cerulli Report on broker-sponsored separate accounts. The same report ranked Smith Barney No. 1 in the separate account consultant program sub-category.
“Over the years, we’ve made a big push in managed accounts,” says a West Coast producer from the firm. “So it’s no surprise where we rank [in the survey],” he adds. “We were being told years ago to get more into managed accounts, that it was ultimately going to be a big part of our business. And that’s proven to be true.”
Managed account assets industrywide increased 6.8% in 2001, underscoring investors' interest in professional, separate account management, according to Frank L. Campanale, president and CEO of Consulting Group, the managed money unit of Salomon Smith Barney.
Campanale says he expects to see “further growth in this category, as the industry creates innovative, new products that enable investors to access managed accounts with higher levels of diversification.”
Managed accounts have advantages over mutual funds, according to reps. “There are tax benefits as well as the asset-based fee structure,” says a Smith Barney rep. Clients also like that they have access to money managers who aren’t normally available to them.
At the same time, Boston-based research firm Cerulli pegged managed account profit margins at 20 percent, half the profits for mutual funds. A lack of industry standards is driving the costs of operating systems sky-high and squeezing margin.
For more on managed accounts, please see the upcoming April issue of Registered Rep. magazine.