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Brokerage Firms Shift Away from Centralized Portfolio Management as Advisor Autonomy Grows

Posted on December 11th, 2024 at 11:03 AM
Brokerage Firms Shift Away from Centralized Portfolio Management as Advisor Autonomy Grows

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï

After years of promoting centralized portfolio management, brokerage firms are increasingly supporting advisors who prefer more control over investment decisions, according to AdvisorHub. Recent data from Cerulli Associates, a Boston-based consulting firm, indicates that firms are less focused on using home-office discretionary portfolios, with only 30 percent ranking them as a priority this year, down from 47 percent in 2022. Meanwhile, 70 percent of firms are emphasizing improved portfolio construction tools for advisors, up from 56 percent last year.

While in-house models have traditionally been viewed as less risky and often perform well, firms are now prioritizing flexibility. AdvisorHub reports that concerns about advisor attrition has led firms to offer more tools that support advisor-managed strategies instead of requiring reliance on home-office portfolios.

Regional and independent firms are leading this trend, offering greater autonomy through rep-as-portfolio-manager programs. RBC ÍøÆØ³Ô¹Ïalth Management U.S. holds the highest percentage of assets in these programs at 55 percent of its $250 billion in advisory assets. Raymond James and ÍøÆØ³Ô¹Ïlls Fargo follow with 46.3 percent and 37.1 percent, respectively. In contrast, large wirehouses like Morgan Stanley and Merrill Lynch have seen a slight decline in rep-as-PM assets, as they shift toward Unified Managed Accounts (UMAs). Those UMAs allow some advisor control while including guardrails like tax optimization, appealing to those who want more say in portfolio construction.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law

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