Wrapping in the USA
US fund managers are now offering three types of wrap account as the next gen-eration of products.
US fund managers are now offering three types of wrap account as the next gen-eration of products.
Alliance Capital Management senior vice-president Tony Poleondakis says the three programs - packaged, open and hybrid - are investment-driven.
The packaged program is a mutual funds-only wrap where the client turns over control to asset allocation programs. There are both domestic and international versions and the split between the in-house managers and external ones is on a 50/50 basis. The minimum allocation in each fund is $25,000.
The open program wraps are totally adviser-controlled and driven by the finan-cial plan. The wrap uses software-assisted asset allocation and readjustment de-cisions fall to the adviser. Poleondakis says the wrap is a funds supermarket model.
The hybrid program offers a recommended asset allocation mix, but the client is not required to follow it. Poleondakis says it is a small funds supermarket ver-sion and the advisers can adjust the mix of managers. The readjustment of allo-cation can be done by either adviser or wrap provider and it has the ability to hold direct stock investments.
"The hybrid is adding features while lowering fees," he says.
In 1999 packaged wraps held 63 per cent of the market, with hybrids taking 21 per cent market share.
Hybrid wraps are growing at 145 per cent last year as the providers, like Schwab and Merrill Lynch, have the power to spend millions on the technology required for the product and the distribution channels. Open and packaged wraps only achieved 48 per cent growth in the same year.
These figures have to be compared to the rest of the US financial services mar-ket where mutual fund wraps only account for 2.17 per cent. Poleondakis says 401K plans are still where the big money is placed.
These wraps are under growing pressure not to cut fees, but to add more serv-ices, he says.
"If there is a service or product out there, then managers will wrap it," Po-leondakis says.
Recommended for you
ASIC was active in the first quarter of 2025 with several financial adviser bannings and court action, while the FSCP also handed down outcomes to advisers.
With a joint venture announced between WT Financial and Merchant Wealth Partners, the firm may have a US background, but partner David Haintz has a long history with Australian financial advice.
The big four bank is set to see $40 million per annum in cost savings as it continues to migrate customers from its Asgard wealth platform to BT Panorama by FY26.
AMP North has added three new managers to its range of managed accounts for financial advisers and also extended its existing partnership with Betashares.
