Finance and technology have merged. As far as we're concerned, financial expertise is now the product and the technology is the platform that delivers it. Anyone who has both is functionally a "TAMP."
And if you have an interesting product, platform or process that integrates them, there may be a spot for you in the 2020 America's Best TAMP guide. Details are HERE.
We've been tracking this space for years now, profiling roughly 20 companies with each annual guide. This year, we want to do something different.
First, we're opening the doors to a more differentiated mix of companies. It's not about sheer scale any more. With the class of 2019 running $690 billion in assets, we've already got the mainstream covered.
What we want now is the broadest possible survey of all the great things people today are doing with the ability to deliver portfolios, processes and support in an automated remote environment.
Not all front-office applications of TAMP systems will look alike. They'll address different challenges and play into different competitive strategies. Some make sense for firms evolving in one direction. Others are ideal partners for other firms.
And some will be pure robots. They need advisors to help connect with the thousands of human investors on the other end of their virtual relationship. There's room here for them too.
Platform and product, scale and service
When times are good, technology is the sizzle that entices prospects onto a platform. Provide a few differentiated tools (at a discount or even at a loss) and sooner or later you’ll get a chance to sell a deeper relationship.
It’s similar to what a lot of advisors do now with mass affluent accounts, as gurus like Michael Kitces have told us over the years. Capturing advisory fees now enables bigger wins on the AUM front down the road.
In this model, the portfolio — the managers, proprietary strategies and allocations — is the sizzle, the product that brings people to the table. Locking down long-term relationships to your technology platform is the steak.
The technology-driven TAMPs are hungry for that platform win. Everyone else rises and falls according to how well their portfolio solutions measure up.
Put yourself in your client’s position for one moment. Which aspect of your operation matters to them?
And the thing about the platforms is it’s all about scale, squeezing basis points out of trillions of dollars. That’s custodian-level scale, major ETF or wrap sponsor scale.
It’s a commodity business where fees slide to zero. Look at BlackRock. We admire their size but I wouldn’t tell anyone to buy the stock right now when Fidelity and Vanguard have crashed expense ratios for all but a handful of prestige players.
We're looking for the big fish of tomorrow. The future will be won by better ideas, Chip Roame at Tiburon tells us. Pricing can always decline. Value is what we make today.
And if you've been told you aren't a TAMP yet, you might be surprised. More details HERE.