An executive at SunTrust Banks Inc. said he expects its new unified managed account platform to draw customers and help it double its assets under management within the next half-decade, but one analyst says it could be an uphill climb for the Atlanta company as it goes up against more established players.
ClearSight, which SunTrust launched last month, allows advisers to offer an array of investment products through a single account. Andy Muldoon, an executive vice president for SunTrust and the head of personal asset management at its private wealth management arm, said ClearSight lets clients customize a portfolio with increased control, tax management, access to proprietary and nonproprietary managers, and simplified portfolio reporting. He said the platform should contribute to an increase in the asset base at SunTrust, which has $32 billion of assets under management.
"We strongly believe in our ClearSight and fiduciary investment model as being an important solution that benefits individuals," Mr. Muldoon said. "In terms of growth, we believe we can grow our assets under management at double-digit rates over the next three to five years."
Matt Bienfang, a senior research director in the brokerage and wealth management practice at TowerGroup, an independent research firm owned by MasterCard Inc., said SunTrust is trying to draw customers by offering a platform with strong performance and tax optimization tools. "Neither are new concepts," he said. "However, it is very difficult to deliver on unless you can get a unified view. "Overlay managers typically offer these in some form or another."
The crowded market includes Placemark Investments Inc. of Wellesley, Mass., and other overlay managers that offer unified managed accounts to financial services companies, Mr. Bienfang said.
One thing working in SunTrust's favor is its in-house sales force, Mr. Bienfang. Also, the unified managed account is still a fairly new product that accounts for 6% of managed account assets, according to TowerGroup. "The UMA is a much more holistic approach to asset management and can certainly be of value when you have large, diversified portfolios and households," Mr. Bienfang said.
Mr. Muldoon said the global financial crisis could hamper ClearSight's growth. The landscape of the financial industry has changed dramatically, but with the change comes opportunity for SunTrust to land new customers, he said.
SunTrust constantly evaluates economic trends and associated risks as well as new investment opportunities, Mr. Muldoon said. "It's a responsibility SunTrust takes seriously and one that is at the heart of ClearSight. We will continue to offer a streamlined process combined with leading technology and intellectual capital while continuing to grow assets," he said.
Mr. Bienfang said that, in this environment, he does not see where ClearSight delivers much of an edge "beyond the advantages that already exist for UMA and overlay management."
"The notion of risk management within the UMA account and the role of the overlay manager are, in general, advantages over other types of accounts and platforms," he said, "given the more holistic view of the assets and the ability to manage risk across them. But that would apply to any market crisis" and is "not specific to the current credit crisis."
SunTrust, which has spent the past 18 months developing the platform, will do fine with a certain segment of the market, Mr. Bienfang said, but the question is "whether it can scale down and do they want it to scale down" to lower-income investors. "The technology behind UMA and overlay management is fairly significant" and "the economics are challenging figuring the average account is being charged between 160-170 basis points," he said.
