Open Architecture and its Role In Wealth Management

A Presentation to California Bankers Association

Presentation: Open Architecture and its Role in Wealth Management (PPT) 

Ron Albahary, CFA, Managing Director for SEI's Private Client Asset Management Group, discussed the opportunities and challenges of open architecture for banks, its historical place in the industry and the rationale for both wealth managers and clients.

Today’s clients are comfortable receiving a large part of their investment information from one source, but not all their investment choices,” said Mr. Albahary. “In order for banks to successfully attract and retain clients, they must continue to pursue an open architecture investment strategy.”  

Mr. Albahary identified several factors required to successfully introduce open architecture:

• Hiring and training business development professionals experienced in marketing open architecture.
• Retraining existing investment professionals and/or bringing in new personnel to focus on building and managing asset allocations for client goals instead of security selection. A new compensation structure rewarding this behavior needs to be put in place.
• Building and/or subcontracting world-class manager search, selection and oversight capabilities to avoid suspect practice of selecting managers based on past performance.
• Building and/or buying the appropriate technology and operations infrastructure to support the program
• Securing senior management commitment

In a SEI Executive Quick Poll, wealth managers identified a desire to be perceived by clients as objective and free from conflicts of interest as the number one reason for their move to open architecture.