Sales of unified managed accounts will continue to grow in 2005 as banks keep unveiling platforms for the product in an effort to develop new assets from existing customers.
"We learned this year that client assets that we couldn't gather or assets that went elsewhere ended up in accounts like these," said David Skolnik, a senior vice president and sales and marketing director for wealth and institutional management at Comerica Inc.
The Detroit banking company became the latest bank to start a unified managed account platform when it introduced one in November. It is not alone. A sampling of the largest banks' offerings of products and services found that nine out of 15 respondents are selling unified managed accounts and a 10th, Bank of America Corp., announced plans in July to introduce the product next year.
Mr. Skolnik said Comerica plans to use the platform as a way to increase sales of its other products, including its managed accounts and mutual funds. He said he expects to generate $50 million to $75 million of assets on the platform by the end of 2005.
About a year ago, he said, Comerica combined its brokerage unit, investment management group, trust business, private bank, institutional trust unit, and insurance operation to form Comerica Wealth and Institutional Management, which has $118 billion of assets under management.
Mr. Skolnik said the group was created in an effort to "break down" internal barriers to doing business at Comerica. When the division was created, he said, he realized that it needed a platform to bring the products together.
"To look at the high-net-worth segment of our customer base, we realized we needed to not just push a product," he said. "We needed to offer a tool with solutions across the products they had and the products they wanted."
Mr. Skolnik said the unified managed account platform gives Comerica customers the ability to use proprietary and nonproprietary products to create a wealth management plan. Response to it has been strong, he said.
"We have gotten a lot of excitement and enthusiasm from both our sales force and our clients," he said. "Everyone is interested in sitting down and learning about this."
The unified managed account is still a relatively new product. It links a collection of investment products on one platform, including everything from separately managed accounts to mutual funds, and first appeared on the market five years ago. Wachovia Corp. introduced the first bank unified managed account in 2002.
Wachovia's Diversified Managed Allocations was started in December 2002 and by Aug. 31, 2003, had accumulated $500 million of managed assets. By July 31 this year, it had $2.57 billion.
Lee Chertavian, the chairman and chief executive officer of Placemark Investments, a Wellesley, Mass., company that distributes unified managed accounts, said he expects banks to double their market share in this product within five years.
Banks, family offices, and independent wealth managers collectively manage 30% of the assets held in unified managed accounts, Mr. Chertavian said, and brokerage firms manage 70%. He said he expects brokers will manage 40% of these assets within five years, banks 40%, and family offices and independent wealth managers about 20%.
Placemark got its first bank relationship last summer, Mr. Chertavian said, when it began offering its unified managed account platform to customers of J.P. Morgan Chase & Co. through FundQuest Inc., a Boston managed account provider. Placemark is to announce a relationship with another multinational bank this month or next, he said, and has five other banks "in the pipeline."
Mr. Skolnik said competitive pressure had not prompted Comerica to start its unified managed account platform. Most midsize and small banks still do not offer the product, he said, but Comerica started its platform in order to complete its product menu.
"A lot of banks still don't offer a true unified managed account," Mr. Skolnik said. "Wire houses have been at it for years. One of our key objectives is to continue to allow our sales force to be more sophisticated than the competition. We want to offer a greater, more sophisticated set of products."
It remains difficult to determine the size of the unified managed account market. David Haywood, an analyst at Financial Research Corp. in Boston, said his company does not break out data on unified managed accounts because the product is still relatively new.
Charles "Chip" Roame, the managing principal at Tiburon Advisors in Belvedere, Calif., said that data regarding the product are still nebulous but that banks are well-positioned to succeed on this platform.
Comerica will continue aggressively expanding its unified managed account platform, Mr. Skolnik said. The company spent much of this month rolling it out and training salespeople, he said, and he expects to complete the rollout to Comerica's financial consultants and wealth advisers in January.
"This is not about a product push," he said. "We want to change the culture here and introduce a true advisory culture at Comerica. We have developed a financial planning group. We need to educate and provide products and services."
He added, "Our goal with unified managed accounts is bigger than just gathering assets. We want to develop more consultative relationships. That is the long-term goal."
