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Coach
Anyone knows about the base for chase PCA?
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We run all IM in house across 6 model portfolios. 3 passive ETF models 3 tactical models of stocks, etf, and mutual funds. We custody at TDA so are able to use iRebal. We rebalance periodically and will make changes as we see fit. I wouldn’t change it I can’t imagine laying a third party to so this especially for passive management.
We also use Black Diamond for reporting which allows us to provide professional reporting and billing that you’re probably getting from your TAMP today
Our advisory firm solely utilize third party asset managers. Other than our own accounts, none of the portfolio management is done in-house and is all farmed out to outside third party asset managers. In fact our firm is non discretion advisory firm because we don’t do any management in-house for several reasons (1) compliance wise don’t need to keep tickets or trade blotters (2) don’t need to keep list of securities held (3) End of year calculation for annual update on ADV is much easier as the AUM isn’t reported on the ADV (4) don’t have the worry if trading errors (5) don’t have to worry on Liability is miss something in the market now while the advisory firm may have some liability most of it would be on the third party firm as they are the ones who ultimately have the discretion authority (6) e&o insurance may be cheaper as non discretionary and portfolio management farmed out.
While yes it can cost a bit more for third party asset manager to us the additional cost for us far outweighs for the liability and extra compliance a d supervision. Before you look to do it in-house, do your home work and research on other cost and potential liability and see if the savings are worth the extra headache and compliance
Coach
We went through this conundrum a few times in the past 12 years as finally in 2011 we fired all outside MM and brought IM in-house. In retrospect, it was the best decision we ever made! Besides having full control of our business, clients get to save the add-on SMA fees. It helped us retain and grow AUM. In the beginning, we were like headless chickens trying to figure our the right model. We used to have 5 independent portfolio strategies, including the addition of a hedge fund that managed money for us but went under and we plugged the hole. Of course we did it not out of altruism but got the talent in-house and repurposed them. Today we run only 2 strategies. One is SMA-based comprised by individual securities in core-satellite model. The retail is robo-based ETF and has 12-different models based on risk tolerance but essentially the same securities selection. It works for us. It’s cheaper and we own it.
What independent models do you use?
Coach
Thanks to iRebal I run like 45 portfolios. I have 2 each of Aggressive through balanced through conservative. Then I run 1 each of the same spread that are ESG/SRI. I have a municipal bond port, I have a starter with one etf for beginners, plus target dates for tiny accounts 2030-2060 for SIMPLE participants with small accounts. The rest are custom for Biggs that want to feel special. I keep checking their model offerings, but until one of them beats me I'm good doing my own.
Where are you?