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Monday, July 29, 2002

Transitioning for MF Firms

by: Tony Pennino

So far, the summer has been fraught with difficulty for mutual fund firms. Between the rollercoaster stock market, the endless corporate scandals, and the rise of redemptions. Now, two firms have separately launched platforms that are designed, in part, to help mutual fund firms make the transition to offering separate account products to their investors.

One product being offered is the enhanced Allocator platform from FOLIOfn. "Our new product is designed to work across the wrap/separate account spectrum. But the new Allocator also excels in the multiple manager space. We are seeing a lot of growth in that area, and our new tech can support firms interested in jumping into the area," contended Steven Wallman, founder and ceo at FOLIOfn, in a conversation with the MutualFundWire.com.

"We want to be a one-stop shop for firms interested in getting into this space," Wallman continued. "We will do the confirmations, the statements, the materials, the custody, the clearing, the execution, the settlement, the web-based interface, the customization, and the branding. We will private label the service. And we also provide an element of consulting for firms looking to get into this arena for the first time."

The firm recently concluded a deal with Brinker Capital wherein the latter utilizes the former's technology platform for its wrap offering.

"It is our concept that the money manager selecting the equities can create a model portfolio. We've eliminated the actual account management -- the back office part -- at the money manager level," the executive added. "The manager can then manage the model portfolio. We or the advisor can manage the individual account. That makes it easier for the money manager to go after greater opportunities. In the end, what you should have is a product that is more tailored from the customers' perspective."

The other firm to leap into this space is Placemark. That firm is launching its TOTAL Overlay Management Services. "Firms are struggling with the current market demand for multi-manager portfolios, greater tax efficiency, and personalization in separately managed accounts. All of these features introduce massive inefficiency in managing client accounts, resulting in operational complexity and increased costs. Placemark has developed an investment process that efficiently delivers these products and capabilities, and can enable program sponsors to offer them without additional investments in staff or technology," argued Randy Bullard, president at the firm.

The firm contends that its new service provides complete manager independence in overseeing the multi-manager portfolios. Executives also stress that the coordination between managers is designed to be seamless.

"Right now, there is no standardized way of interacting with each manager. We wanted to develop a system that would create a standard without forcing sponsors to change their interfaces or infrastructure," Lee Chertavian, ceo at Placemark, told the MutualFundWire.com. "At the core of what we do, we have created this huge optimization process."

In these difficult times, mutual fund firms may well be advised to think of themselves as asset managers instead and offer a number of products in a number of different arenas. With the advent of new platforms to make the transition process easier, these firms should consider a leap into wrap accounts, the offering that is being touted as the next big thing. 

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