BB&T Corp. has introduced a unified managed account platform, and — unlike similar bank-owned wealth management providers — the Winston-Salem, N.C., company plans to transfer all its equity assets under management onto the platform.
David Fisher, BB&T's wealth division manager, said that the company has already moved $1 billion of its $5 billion of equity assets under management onto the platform that it introduced Monday. He said that he expects to have moved all the assets to the platform by yearend. "We have gone all in with this platform," he said in an interview. "Every portfolio will go into this system."
A unified managed account lets a wealth manager use an array of products, including separately managed accounts, mutual funds and exchange-traded funds, in a single account. "This is becoming the standard," Fisher said.
BB&T, which had an overall $10 billion of assets under management at March 31, began looking into offering a unified managed account platform in August, Fisher said. He said he knew at the time that many banking companies had begun offering similar platforms but that BB&T wanted to wait.
"A lot of competitors — a lot of other banks — have put their toe in the water," he said. "When you peel the onion back, the existing managers in those large banks are resistant to new products. We came to a meeting of the minds at the top of the house here, and everyone got in line. We are committed to this from a client standpoint, and we think we are nimble enough to make this work."
Fisher said the open architecture platform will give BB&T's clients a single account for all of their investments.
Analysts said many banking companies have been wary about offering unified managed accounts too broadly because of concerns about hampering inflows into proprietary products. "It is difficult to move everyone into the same format because one template does not fit all," said Burton Greenwald of BJ Greenwald Associates in Philadelphia. This platform "could be the wave of the future, and we could see more accounts moving there in the future, but I don't think we are there yet."
Fisher said 36 of the 40 managers providing investment products within BB&T's unified managed account platform are third-party managers. "It has always served us well to be client-focused first," he said. "We start with their needs, and that is really what is important. We think that we can offer clients the best services if we offer an open architecture array of products. It is just too expensive to build out the level of sophistication necessary to deliver a really broad array of equity styles."
Unified managed accounts are expected to surpass separately managed accounts as the open architecture account of choice within five years, according to a January report from Celent. The Boston research firm projects that unified managed accounts assets will reach $327 billion by 2013, compiling a compound annual growth rate of 35%.
Fisher said he expects BB&T's platform to increase the wealth unit's revenue by 5% in the next 12 months and by 15% during the next three to four years. "Early indications are strong, and we are well-positioned with our clients," he said. "The signs are very encouraging."
SmartLeaf Inc. in Cambridge, Mass., is providing the overlay management for BB&T's platform. Overlay management allows portfolio managers to identify the tax implications of an investment transaction or portfolio rebalancing, and it then makes any changes needed to improve performance.
Greenwald said a UMA platform is a good idea but it might be difficult to get customers on board. "Any attempt to unilaterally change the status quo is unusual," he said.
Fisher disagreed. "Maybe these economic circumstances make this the best time to open a new platform," he said. "When things are going well, clients don't want to change anything."