Commonwealth Rolls Out Portfolio Management Platform

Commonwealth Financial Network developed the Commonwealth Model Management platform to help advisers with systematic managing and rebalancing of client portfolios. 

The adviser-driven system is fully integrated into Client360°, Commonwealth’s client management platform, allowing advisers to rebalance hundreds of accounts simultaneously, the broker/dealer said.   

“This new system gives our financial advisers the ability to scale their investment management function in a more streamlined fashion, providing them even more time to spend with clients,” said Darren Tedesco, managing principal of innovation and strategy.

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Commonwealth says that advisers can create models from scratch, using Commonwealth/Ibbotson templates, from other models, or from an account’s existing holdings. Models can be set up using just tickers or by using tickers and asset categories. Drift variance bands and minimum trade amounts can be set on a model level, and advisers can assign an unlimited number of accounts to a model.

“The system is integrated with our centralized alerting system, allowing advisers to proactively monitor model portfolios so that they can react to drift movement quickly, potentially reducing risk for their clients and systematically approaching a buy low, sell high methodology,” said Tedesco.   

Commonwealth Model Management creates product equivalences (e.g., Apple = Google) to help reduce unnecessary trades/ticket charges and to reduce the number of models that advisers need to create, according to Commonwealth. Drag-and-drop functionality allows advisers to order the asset categories within a model by dragging and dropping them into the appropriate space.

Advisers can produce several enhanced reports, including drift reports, model breakdown (along with target weightings), equivalency history, model audit history, and trade log history. The system accommodates all asset types, including bonds, UITs, and alternative investments. A cash generation feature allows advisers to tap into adviser-set cash buffers and/or create trades to meet the client’s cash needs. Positions in accounts can be locked for any reason in the system, allowing rebalances to occur around the locked position.

Benefits Brokers and Consultants See Opportunities

Benefits brokers and consultants appear optimistic about the future of their firms and see a host of opportunities to provide increasing value to their clients, a MetLife survey finds.

According to MetLife’s inaugural Broker and Consultant Study, more than half (52%) of brokers and consultants with large clients (those with 1,000 or more employees) are very optimistic about the growth potential of their firms as are approximately one-third (31%) of those with small and mid-sized clients.  

In contrast, however, only 25% of benefits brokers and consultants with large clients and 12% with small and mid-sized clients are very optimistic about the benefits industry overall. Three out of five respondents expect employer-paid medical insurance will still be an important growth opportunity in the next three years, but 73% are very concerned about reductions in medical insurance commissions in light of health care reform.   

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“With new challenges for employers often come new opportunities for those brokers and consultants who can bring creative solutions to the table. While wary of how health care reform might change their own business operations as well as those of their clients, four out of five benefits brokers and consultants say their firms are actively exploring new models and strategies in order to stay relevant and pursue growth opportunities,” said Anthony J. Nugent, executive vice president, U.S. Business, MetLife.  

Nearly three-fourths of brokers and consultants expect their clients to rely on them even more three years from now than they do today. Virtually all respondents (97%) feel they have worked hard to keep their clients up-to-date on health care reform developments.

Benefits Brokers’ and Consultants’ Concerns  

Over two-thirds of brokers and consultants in the MetLife study expressed concern that the slow economic recovery may cause employers to cut benefits – particularly small and mid-sized employers. Among advisers with clients with 1,000 or more employees, the top concerns are keeping up with legislative changes and their impact (68%); maintaining/growing top-line revenue at the firm (63%); and attracting and retaining clients (62%). For brokers and consultants with clients with fewer than 1,000 employees, the top concerns are reductions in commissions due to medical loss ratio (85%); maintaining/growing top-line revenue at the firm (82%); and keeping up with legislative changes and their impact (78%).   

Brokers and consultants in the study identified a wide range of potential strategies that they believe could increase the overall profitability and sustainability of their firms. The most popular strategies are enhancing consulting services, selling more voluntary and ancillary products, and playing a greater role in health and wellness.   

The study found that 58% of brokers and consultants see an opportunity to enhance or expand their broker consulting services. The same amount also see a potential to sell more voluntary benefits and ancillary products over the next three years as important initiatives to increase their firm’s profitability and sustainability in a post healthcare reform world. In addition, by 2013, more than half of brokers and consultants expect to see more opportunities to help clients with benefits administration such as enrollment, billing and claims.   

A copy of the study is available at www.metlife.com/brokerstudy.

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