Why a New TAMP for Smaller RIAs Has a Months-Long Waitlist

Potomac President and CIO Manish Khatta’s investment decision philosophy: “Just abide by the price tag, dummy.”

“Our industry has absent on a scale bonanza” wherever significant turnkey asset management platforms give quick shrift to fiscal advisors with below $100 million in belongings less than management, argues Manish Khatta, president and chief investment decision officer of Potomac Fund Management, in an interview with ThinkAdvisor.

Enter: Potomac’s TAMP for the lesser independent FA. Called Union, the unified managed account platform serves up major-TAMP technology plus “human handholding,” Khatta claims.

So far, the firm has signed up 4 advisors for Union. They have transitioned 50% of their books to the UMA, which was launched this past July.

Reaction has been so potent that in the slide, Potomac commenced a months-extensive waitlist. Given that Union’s start, the boutique expenditure strategist that manages advisor portfolios has nearly doubled its AUM to about $300 million.

Potomac is also helping customers via its part as a model lucrative digital company, having operated 100% remotely for a year now. In the upcoming, remote “may be the [industry] norm,” suggests Khatta.

Union, developed for entrepreneurial FAs, is an all-in-a person tech system built-in with Potomac’s back again-business service workforce to run core small business features with support from humans, not from the proverbial automatic “phone tree.”

Khatta, 41, joined the Miami-based mostly organization in 2002, the calendar year following he graduated with a bachelor’s degree in finance from the University of Maryland. His investment decision procedures concentration on quantitative buying and selling systems: “Price is the only issue that issues,” he contends, adding that a “great example” has been the 2020 stock market place.

ThinkAdvisor just lately interviewed Khatta, speaking by cell phone from Fort Lauderdale, Florida. About smaller sized advisors’ urgent needs, he stressed that independents who have labored tough to make techniques of $20 million to $50 million in AUM “deserve far more than a simply call center” to aid them.

Here are excerpts from our dialogue:

THINKADVISOR: With the financial downturn and unstable stock market place, how does becoming a quant assistance you?

MANISH KHATTA: “Just comply with the value, dummy” is what I have on my screensaver. Quants disregard the economy when it will come to dollars management and the inventory market: We feel the only factor that issues is value. Cost is pure there’s fact in cost.

Have you witnessed that verified in 2020?

Certainly. 2020 is a good case in point. The pandemic is arguably the best macro function at any time, and the inventory market place just shrugged it off.

Why does “Just observe the price” operate for you?

It cancels out the sound. If the inventory marketplace is likely up and building new highs, who cares about what else is likely on. The narrative does not issue.

Have expenditure advisors’ requirements modified because of the economic decrease and attendant uncertainty?

Advisors have to be capable to onboard and services customers digitally. It’s no for a longer time a luxury it’s a necessity to their techniques. So all those needs have truly adjusted. In March, we did Zoom training for our advisors.

Why was coaching essential?

They may well have had long term tech enhancements on their roadmap prepared for 5 to 10 many years from now, but the pandemic forced those upcoming enhancements to [be implemented] in 6 months. You have to execute on them now for the reason that of the atmosphere we’re in.

What prompted you to launch the Union UMA [Unified Managed Account] TAMP this earlier July?

It was in response to [smaller] advisors chatting to us about consumer-assistance frustrations they were working with. Our marketplace has gone on a scale bonanza wherever any individual with under $100 million [in AUM] gets a simply call-heart technique and tossed to the aspect. The advisors preferred substantial-TAMP money administration technologies but with handholding.

But why did you introduce Union in the center of a pandemic?

Our agency was distant prior to the pandemic. So we were being currently set up for that, and it included more credence to what we’re supplying. We can teach advisors how to run a remote company, which, in the upcoming, may perhaps be the norm.

What do the advisors you serve require most?

Advisors will need advice far more than nearly anything. Significant TAMPs and huge institutions give them a broad wide variety of money administrators to use but without advice. The advisors we converse to on a each day basis are craving for human handholding from these companies to explain to them the “how” driving developing product portfolios — how to place them together — not just a record of a thousand professionals to select from.

Why don’t the massive TAMPs provide all that, as you say?

I imagine from time to time it arrives down to how the incentives — like revenue sharing — are aligned. But you have to be equipped to exhibit advisors how to use the tech. This is not like some courting site where by you can have all these product [portfolios] and no a person to guideline you.

What is the primary edge that Union brings to the desk?

It’s significant to figure out that our know-how isn’t the top secret sauce. Advisors can get tech all over the place and any way they want. It is the implementation of that know-how and the consumer company that differentiates us. We’re not leaving advisors to their personal units to figure out how the tech operates. Most [advisors] aren’t using technologies adequately. We aren’t [about]: “Here’s the technological know-how. Have a great day.”

Is substantially of available technology generally heading unused because FAs don’t know how to use it?

I imagine so. If an advisor just can’t locate something with the initial pair of clicks, they get disappointed and only use what they know how to use.

Have you built any main improvements to Union given that the initial rollout?

The large thing is that we cut off new small business about two months ago and set all people on a wait around record until, almost certainly, the conclude of January. We took [on] those advisors who were most fascinated and in which the healthy was the most effective.

Why did you choose to interrupt the move?

Considering that assistance is our selection just one priority, we realized that we just can’t say certainly to each and every piece of small business that will come in. We’re producing sure the advisors are a superior match for us and for them. We’re onboarding only 4 [FAs] per quarter. We really do not want to jeopardize assistance, which is a large element of our presenting.

What measures have you taken to defend your company in this difficult time?

We’re 100% remote. We’ve basically been distant for 10 a long time. We experienced a modest place of work, which we shut at the conclude of [2019]. So we have been set up to prosper in this form of surroundings for the reason that of the technology we place in place to have a remote agency. Thus, we can demonstrate advisors how to effectively operate remotely and profitably. We’re a serious-existence illustration of running 100% remotely and digitally.

What’s your short- and extended-time period outlook for the economic climate and inventory marketplace?

We really don’t make predictions. We’re quants: We comply with momentum and journey traits until they disappear. Appropriate now, the sector is satisfying those people who have stocks. Right until that alterations, you have to keep invested. We really don’t have an outlook. What the pandemic taught all people is: Do not make predictions since you seriously never know what the sector is going to do.

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