Separately managed accounts, the professionally run customized portfolios marketed by brokerage firms and independent investment advisers, are booming. The Money Management Institute, a Washington-based SMA trade group, reports that assets held in separate accounts reached $645 billion at the close of last year's third quarter, up 20.7 percent from a year earlier and 41.0 percent from the comparable period in 2003.Yet while SMAs are growing faster than mutual funds, whose assets rose 10.6 percent in the 12 months ended November 2005, to $8.77 trillion, many asset managers as well as SMA sponsors at smaller brokerages are concerned about the future -- not because of any looming shortage of wealthy folk but because of a technology problem."The Andy-of-Mayberry phone-and-fax network that currently links participants prevents the industry from reaching its potential," contends David Gardner, a Charleston, West Virginia­based consultant working with the MMI and Depository Trust & Clearing Corp. to develop a central communications utility. "Connectivity and operations now cost managers between 20 and 25 percent of their fee revenue from sponsors. As the business grows, that figure will take everyone beyond the breaking point," says Gardner.Currently, that business is concentrated: Five brokerage firms -- Citigroup, Merrill Lynch & Co., Morgan Stanley, UBS and Wachovia Corp. -- account for almost 80 percent of the volume. And each communicates with asset management firms in its own format. If a manager is selected by one of these firms, it must pay for the linkage and communicate in the format the brokerage mandates. As the business has grown to include regional brokerages and independent advisers, some managers are supporting 15 to 20 sponsor connections."In one sense, the status quo is fine for the largest firms: Why should they make it easier for smaller competitors to have access to leading money managers?" says Frank Campanale, the Bir-mingham, Michigan­based consultant and former president of Smith Barney Consulting Group who heads the MMI's data-standards committee. "But removing the communications bottlenecks would give more investors and advisers access to a wider number of money managers, and that would increase the business overall."In 2003, after the MMI released a report by Deloitte & Touche that predicted imminent gridlock, the trade group began developing what have evolved into 14 standard messages, or information points, about each account. At the same time, DTCC started work on a sponsor-manager interface akin to the Fund/SERV mutual fund processing service operated by its National Securities Clearing Corp. regulated subsidiary.But commercial vendors that provide communications pipelines between money managers and sponsors argued that a not-for-profit utility would pose unfair competition to them, prompting DTCC to withdraw a filing it had submitted to the Securities and Exchange Commission."We are opposed to a closed standard," says Hilary Fiorella, vice president of marketing at CheckFree Investment Services, a Norcross, Georgia­based vendor. "If DTCC implements the MMI standards, is truly open like [the] FIX and Swift [protocols] and wants to serve as a hub, that's okay."DTCC is now working on an open hub that will be available to everyone and located in a nonregulated part of the organization, says Ann Bergin, who oversees distribution ser-vices there. The hub will use the MMI standards and proprietary DTCC schema, or programming language and formats, that are recognizable by the computer systems of DTCC users. Most brokerages and managers already use the New York­based utility either directly or through intermediaries."The ultimate benefit of standardization using a hub comes through the concentration of traffic," adds Bergin. "Using our schema but communicating through another hub doesn't get anyone there."Bergin says a steering committee of initial users is being formed, but getting the hub going may require a major player to take the first step. Fortunately, says one executive working on the project, "one large manager, whom all the large firms have in their programs, is moving toward requiring that sponsors use the hub to access its managers. That could be the trigger."