This is a summary of a panel discussion from the Money Management Institute’s 2012 Spring conference held in Chicago, IL. This is part 1 of 2. You can read part 2 of 2 here.
Moderator: Jay Link, Managing Director, Merrill Lynch
Lorna Sabbia, Managing Director, Head of Managed Solutions Group, Merrill Lynch
James Walker, Head of Consulting Group, Morgan Stanley Smith Barney
Matthew Witkos, President, Eaton Vance Distributors. Chairman of MMI.
Has the growth of RPM programs peaked? According to Dover Research, five years ago, there was $1.2 trillion of client assets in managed solutions and RPM/RAA combined were less than 30% of that total. Today, total managed assets have grown to $2.4 trillion while rep-driven programs have increased their share to 40% or almost $1 trillion.
How important is RPM to your firm?
RPM is Morgan Stanley’s fastest growing program, Walker reported, with $560 bil in all advisory programs, $150 bil in RPM globally. Major change in past few year has been change from individual equities (now 34%) to include ETFs, mutual funds, etc. This is a great solution for Reps that consider themselves to be active allocators. Trend: move towards discretion, driven by FAs practice management, customers want outcome based investing. From a regulatory sense, it’s easier to deliver on fiduciary duty.
Sabbia joined the Managed Solutions Group seven months ago. At Merrill, RPM is called the Personal Investment Advisory (PIA) program and was launched in 1996, now $105 bil AUM. Approximately 4,500 FAs leverage the program and they’re segmented into three buckets: it’s their fastest growing segment with a $15.7 bil net increase last year and they’re on track to beat that number this year, she said.