Coming to an Investment Platform Near You!

Ask any financial advisor to list the challenges he or she faces, you can be assured that fee and revenue compression will be at or near the top of that list. 

The downward pressure on advisors and the fees that they charge for their services has been present for years and shows no signs of subsiding in the future.  Demand for cheaper share classes, cheaper financial advice, availability of investment information via the internet, and the growing fascination with machine leaning robo-advisors, are creating a downdraft on fees that advisors charge.

There are three basic components to delivering an “investment to a client”.  One, the investment management component, generally accounts for forty to fifty percent of the total fees charges.  Two, the investment infrastructure, (accounting, custody, legal, etc.) generally accounts for ten to twenty percent of that cost, and three, the delivery of that investment along with the accompanying advice accounts for roughly forty percent. 

Of those three components, the least scalable is the delivery and advice function.  As a consultant, you know that there are only so many hours in a day, and you have to make them count.

We know that downward fee pressure is not going away, so how do we solve the problem?  Enter the concept of Portfolio Cloning or replication.  Imagine, creating a “Custom index” consisting of nothing but Morning Star Five Star rated funds, at virtually no cost.  You have now provided an allocation meeting your client’s objectives at a significantly reduced investment cost, and simultaneously relieving the pressure on the least leveraged component of the fee equation: your advisor fees. 

Portfolio Cloning (or replication) is coming to a platform near you, and it’s just what the Doctor ordered for your investment clients, and your investment practice.

For more information, click here!