Fee Management Solutions: The Who, What, and Why of Managed Account Fees

Published by: TowerGroup

Published: Aug. 18, 2008 - 14 Pages

Table of Contents

Report Coverage

Introduction

Vision

Profiling the Fee Management Tools

Key Features for Fee Management Technology

Do Not Underestimate the Implementation Challenge

VENDOR AND PRODUCT PROFILES

Bonaire Software Solutions

CheckFree

Octavian

Redi2

Summary

Abstract

Report Coverage

As accounts and assets increase in the managed account market, the fees the industry will charge these accounts are expected to become more varied and complex. Therefore, it will be even more important for firms to utilize a fee management solution that can scale with this growth while also supporting the uniqueness of individual accounts. This TowerGroup Research Note is a companion to Research Note V55:09O, Managed Account Fee Management: Everybody Must Get Paid! The current Note summarizes the issues related to fee revenue management and highlights four key vendors offering software solutions in fee management: Bonaire Software Solutions, CheckFree, Octavian, and Redi2 Technologies.

TowerGroup Take-Aways

• TowerGroup expects that, without innovation, the cost to process fee revenue in the managed account industry will grow to over $42.4 million (USD) per year by 2012. Managed account sponsors should consider the flexibility of fee management solutions for serving both advisors and managers in addition to meeting their own requirements.
• Companies without solid data governance will find it frustrating to implement a fee revenue solution and will lengthen the duration and increase the cost of the implementation.
• TowerGroup believes that, although performance-based fees in both separately managed accounts (SMAs) and unified managed accounts (UMAs) are almost unheard of today (hedge funds aside), competition will ultimately drive the market this direction.
• Redi2's Revenue Manager appears to have the momentum to capture additional market share in a market that is wholly underpenetrated, but CheckFree as the incumbent SMA vendor may not be far behind.

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