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Tech/Research Tool Targets HNW Wealth Managers

A year after its launch, a New York-based services provider for high-end wealth managers hopes to draw more advisors to its platform by offering access to the kind of research that’s usually available only to institutional players. Dynasty Financial Partners expects to unveil its new program by the end of the first quarter of 2012. Designed by Dynasty, it accesses the research capabilities of Callan Associates using the technology tools of Envestnet, simplifying the advisors’ ability to compare asset managers’ performances and build portfolios for clients, President and Chief Executive Shirl Penney says.

There are no immediate plans to market the web-based investment program outside the Dynasty platform. “It’s a proprietary advantage,” Penney says. “Our game plan today is not to be an asset management service company. It’s a broad-based wealth management service company. And we have not made a decision to ala carte pieces of our platform. Today it’s available on a fully integrated basis.”

Tim Welsh, president of Nexus Strategy, a consultancy in Larkspur, Calif., says advisors who want to run separately managed accounts are often daunted by the due diligence that’s needed on the managers. Dynasty’s program provides a way to pore through the thousands of managers and find exactly what works for an advisor; having access to Callan, which normally markets to institutional players and is “hugely expensive,” also serves as a strong attraction, he adds.

“It’s taking the institutional asset management model and bringing it down to retail,” Welsh says. “It’s all bundled together for you. You can bring it down to a lower asset level. Usually that stuff is for $10 million, $20 million portfolios; with Envestnet, you can go down to $500,000.”

Penney says the new program can free up 25 to 30 percent of an advisor’s time each week. The “all in” cost to advisors varies with the managers they select, ranging from 60 to 100 basis points, he says.

After two years of preparation, Dynasty launched in December 2010 and has ambitious growth plans. It has announced eight firms have joined the network, including Lori Van Dusen’s LVW Advisors, who signed up last fall. Penney, the company’s founder, says Dynasty has just over $10 billion in assets; its goal is to have 100 firms over the next five years, aggregating more than $100 billion in AUM. Partners and administrators are the chief stakeholders in the business. “It was important to us to be built to last and not to be built to flip by having large sums of private equity capital,” says Penney, a former director of business development for global wealth advisory services at Citi Smith Barney, and former head of executive financial services at Smith Barney.

Watching the changing direction of industry assets gave Penney and his partners the idea to form Dynasty, he says. “In my previous life I saw the huge acceleration of asset flows to the independent channel and just knew I wanted to be an entrepreneur,” he says. Advisors’ clients became wealthy not because they’re high-income earners, but because they hold equity in things that appreciate such as businesses, he says; it’s a lesson that’s not lost on advisors these days.

Providing new tools for those advisors is part of Dynasty’s strategy, Penney adds. “The more volume that you’re driving with key resource partners, the more flexibility you have in pricing. Our platform evolves daily,” he says. “We wake up every day and think about platform, how do we develop a better platform. That will be an evolutionary process forever.”

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