Products July 1, 2021

Investment Product and Service Launches

Northern Trust announces latest digital document capture feature; Adaptive Investments partners with WealthShield to manage portfolios; and Equitable adds managed accounts and cash balance plan to solutions for small businesses.

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Art by Jackson Epstein

Art by Jackson Epstein


Northern Trust Announces Latest Digital Document Capture Feature

Northern Trust has launched a machine learning-powered document capture capability as the foundation of a multi-year investment to digitize alternative asset servicing and enhance the experience for asset owner clients that invest in complex private market and unlisted assets.

Digital document capture enables Northern Trust to streamline historically manual workflows by automating the receipt and processing of alternative asset documents and fund manager reports on holdings and performance of hedge funds, private equity and other alternative assets. Northern Trust’s proprietary solution combines robotic process automation and cloud-based technology to provide transparency and data standardization that enables greater understanding of portfolio risk and performance. 

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“As alternative asset classes continue to grow in importance to institutional investors, Northern Trust is committed to driving efficiency and reducing operational risk through the use of emerging technologies,” says Pete Cherecwich, president of corporate and institutional services at Northern Trust. “Digital document capture is a huge step forward, and only the start of our larger plan to enhance alternative asset servicing for the benefit of our clients.”

Automated document capture enables Northern Trust’s alternative asset servicing teams to focus on more strategic aspects of the process and reduces the need for manual intervention when coordinating saving, storage and categorization. Since alternative assets are often valued on only a monthly or quarterly basis, asset owners can also benefit from faster servicing of their assets and deeper data insight provided through artificial intelligence (AI). 

Adaptive Investments Partners with WealthShied to Manage Portfolios 

Adaptive Investments and WealthShield  have entered into agreement to manage and deliver SMART Portfolios and RISKHedge Portfolios in a collaborative effort. 

SMART Portfolios optimize strategic, opportunistic and tactical segments into a single portfolio deliverable.  SMART Portfolios are offered in five risk models, from conservative to aggressive, comprised of both ETFs and Mutual Funds.

RISKHedge Portfolios are tactical and designed to be added as a sleeve to a traditional portfolio.  The RISKHedge Portfolio is similar to the tactical segment of a SMART Portfolio.  RISKHedge Portfolios are also offered in five risk models, from conservative to aggressive, comprised of both ETFs and Mutual Funds.

“SMART Portfolios have delivered solid performance since their inception, roughly seven years ago,” says Gregory Rutherford, president & CEO of Adaptive Investments. “The SMART Portfolio unique structure, aligns with client expectations, providing benchmark like returns in up markets while mitigating risk in down markets. We focus efforts to consistently improve our portfolio solution.  We are excited and confidant that we can enhance portfolio risk adjusted returns, by incorporating Wealth Shield’s proprietary Market Valuation Framework (MVF).  And, we welcome the addition of WealthShield’s tremendous team of highly accredited investment professionals to the process”. 

“We are excited to join the Adaptive Investments team and help strengthen the SMART Portfolio and RISKHedge investment process,” adds Clint Sorenson, co-founder, WealthShield. “We have tremendous respect for what Adaptive has built and the unique portfolio design that has helped deliver some of the best portfolio returns in the marketplace.   By combining efforts, we are convinced that SMART Portfolios and RISKHedge Portfolios will continue to offer Financial Advisors, best in class, and differentiated portfolio solutions, for delivery to their clients.”

Equitable Adds Managed Accounts and Cash Balance Plan to Solutions for Small Businesses

Equitable has announced the addition of customized managed accounts and a cash balance plan to its group retirement plans for small to medium-sized businesses.

The firm notes that managed accounts provide an option for people looking for guidance in creating retirement plan allocations, with a customized portfolio for each plan participant based on their current age, location, contribution rate, marital status, gender and balance. Managed accounts can be further personalized by the participant online. This customization can be beneficial to helping retirement savers achieve their goals.

The new managed accounts will be provided through Stadion Money Management, an investment management firm and a 3(38) fiduciary. There are no minimum account balances for either plans or their participants.

“Extending increased customization and personalization in their 401(k) plans, along with advice and a full suite of employee benefits solutions is important to helping small business owners and their employees weather uncertainty and plan for their financial futures,” says Jessica Baehr, head of group retirement at Equitable.

In Practice July 1, 2021

Amid the Pandemic, Advisory Industry Enjoyed Record Demand

New performance research published by the Investment Adviser Association shows the industry ‘defied’ the pandemic during the past year, achieving significant growth across key metrics for the ninth consecutive year.

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Reflecting on a new industry snapshot research report published by her membership and advocacy organization, Karen Barr, president and CEO of the Investment Adviser Association (IAA), says the advisory industry has demonstrated remarkable flexibility over the past year.

“We are proud of the responsiveness and resilience shown by the investment adviser community as they guided clients through unprecedented challenges,” Barr says. “As the industry’s consistent growth demonstrates, investors recognize the value of fiduciary advice in helping them meet their financial objectives—whether planning for retirement, saving for homeownership or funding an education.”

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According to the IAA’s detailed report, which stretches to nearly 90 pages, the investment adviser industry continued to experience record-breaking growth over the past 12 months, with close to 14,000 Securities and Exchange Commission (SEC) registered Investment advisers (RIAs) now in operation, managing $110 trillion in assets for nearly 61 million clients. These data points show the number of SEC-registered advisers, the number of clients they served, the assets they managed and the number of people they employed all have reached new record highs.

“The data in this year’s report confirmed what we’ve known all along—that demand for services provided by advisers continues to increase, even as supply rises,” says John Gebauer, president of National Regulatory Services, which contributed to the report. “Advisory services are increasingly viewed as an indispensable and ubiquitous necessity for financial well-being for ever-greater portions of the population, the demand for which has been less sensitive to economic cycles than many other services. If this pattern continues to hold, the industry will experience continued and robust growth, further demonstrating its crucial role in the lives of investors. It’s an exciting time to be an investment adviser.”

The IAA report suggests individual investor demand for advice is surging. While all client segments have grown over the past three years, growth in both the number and assets of individual clients has been “exceptionally strong,” with the number of individual investors growing by 38% over the past two years.

In a finding likely unsurprising to advisers focused on the defined contribution (DC) plan industry, which continues to experience substantial consolidation, growth has been strongest for the largest advisers. The IAA data shows advisers with more than $100 billion in assets have experienced gains in assets of at least 14% annually over the past five years, far ahead of smaller advisers.

As detailed in the report, SEC registered firms range in size from local boutiques to multinational corporations. In 2020, 88.5% of advisers had less than $5 billion in assets under management (AUM), with the majority having between $100 million and $1 billion. More than eight in 10 advisers are small businesses employing fewer than 50 people, but over the past three years, the number of advisers has increased in all size categories except advisers with less than $100 million in AUM. Growth was strongest among firms with over $100 billion in AUM.

Zooming into the operation of these firms, IAA finds, compensation structures have become increasingly flexible. Broadly, advisers have become more likely to offer fixed fees and hourly fees in addition to asset-based fees than they were in the past.

In terms of client deliverables, the primary service investment advisers offer is portfolio management. In 2020, 97% of advisers offered portfolio management services to one or more groups of clients. At the same time, 61% of advisers offered other advisory services to their clients as well. The most common of these services was financial planning. In 2020, 42.3% of advisers provided financial planning services, serving approximately 4.6 million clients. After financial planning, the most common additional services were providing advice on the selection of other advisers (perhaps as part of a sub-adviser relationship) and retirement plan/pension consulting services, which were offered by more than 20% of advisers in 2020.

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