With US banks, insurers and brokerage firms offering separately managed account programmes, expenditure on the outsourcing platforms and technology to support them will rise steadily to $439.2 million by 2008. Or so say consultants Tower Group in a new study of the subject, entitled “Managed Account Platforms: Scrambling to Keep Pace in the Managed Money Race.”
Tower Group says that, in order to reduce time to market, many managed account providers are choosing to outsource through a managed account platform. These platforms provide technology and business process outsourcing for sponsors that wish to offer managed accounts to retail investors.
TowerGroup estimates that assets in managed accounts will increase at a compound annual growth rate (CAGR) of 22.6% from $399 billion in 2002 to $1,105 billion in 2007. TowerGroup further predicts that financial services institutions spending on managed account platform services will increase at a CAGR of 11.2% from $258.9 million in 2003 to $439.2 million by 2008.
Matt Schott, a senior analyst in the Retail Brokerage & Investing research practice at TowerGroup and author of the report, has analyzed the evolution of the managed account marketplace and reviewed the vendors that offer managed account capabilities. The research discusses the challenges these vendors face today and will face in the future. Schott also focuses on money manager due diligence and the people and tools each vendor brings.