Seeing the Full Picture When Analyzing a TAMP’s Fee Structure

Published February 18, 2021

The cost of a Turnkey Asset Management Platform (TAMP) can be a major differentiator because fee structures are unique from TAMP to TAMP. It’s important that a Registered Investment Advisor (RIA) dives deep into the fee arrangement in terms of both asset management expenses and technology fees to get a full picture. After all, a few basis points of savings may factor heavily into acquiring a new customer or retaining an existing one. 

Since TAMP fees have a direct impact on both net client returns and a firm's bottom line, you must perform a periodic analysis of platform expenses and decide whether the services rendered continue to justify those fees. We suggest a few different target areas for analysis… 

Investment Management Expense 

Some Advisors gravitate more to the investment management side of the business, while other Advisors may focus more on business development efforts and expanding the client base. In either case, an Advisor’s flexibility stems from having access to turnkey third-party models or possessing the ability to construct portfolios themselves since many Advisors pursue a combination of approaches. Each strategy has its own cost considerations, and the chosen path depends upon the preferences of an individual Advisor. 

GeoWealth allows for both options, meaning Advisors who want more control over investment choice can also customize management fees according to their needs. This strategy prevents an RIA from getting locked exclusively into the rigid fee structures that are typically offered by the larger, legacy TAMPs. Plus, Advisors who want to leverage the names of major institutional asset managers, find value in offering branded collateral when marketing and prospecting – something that not all TAMPs can offer. But management fees comprise only one piece of the overall cost structure. 

Platform Technology Fees 

When examining TAMP fees, notice the cost differences between solutions that rent the technology driving their platforms versus the few that build it in-house. TAMPs that do not develop and design their platforms need to command higher fees since it means one more intermediary occupies space in the hierarchy. As a result, these TAMPs pass on technology expenses, eroding client net return and increasing operating costs for the Advisor. This scenario negatively impacts revenue and can adversely affect an RIA's overall profitability.  

GeoWealth owns its technology and therefore remains more competitive against peers with regard to fees. Without incurring additional cost, clients benefit from our in-house experts that are able to directly respond to operational issues and consider input from Advisors when planning for further platform improvements. GeoWealth also ensures a dedicated Relationship Manager who knows the ins and outs of our platform, understands the requirements of your business, and offers suggestions on how your staff can get the most from the platform. 

Ongoing Scalability Opportunities 

As your firm grows, you'll want a platform that grows along with it. Some RIAs may be dismayed when they witness their legacy TAMP raises costs directly in proportion to their AUM growth. By contrast, GeoWealth has a flexible pricing structure that responds to each RIA’s book of business. Other TAMPs may be unwilling or unable to offer such customization, but GeoWealth’s adaptive pricing model makes it possible. 

GeoWealth is also more scalable than competitors. As your AUM grows, GeoWealth is able to grow along with you as a true partner, freeing up more of your dollars for pursuits such as sales and marketing efforts. In addition, when an RIA's practice expands, operations become more complex as back and middle office processes increase in scope and frequency. Along with a more favorable cost structure, GeoWealth adapts our platform to handle a greater number of clients and a higher volume of trades and related transactions. 

Bringing It All Together

A partnership with GeoWealth brings much more than simple cost savings. By supporting the unique needs and nuances of each client, GeoWealth's platform adds innovative features and functionality to an RIA's everyday operations – all accompanied by a more manageable expense arrangement that leads to a healthier bottom line. Contact GeoWealth today to take your firm to the next level. 


 

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