BlackRock’s Aladdin, a portfolio risk and construction software, can count another large turnkey asset management platform as a client.
Brinker Capital, a turnkey asset management platform used by more than 5,500 financial advisors and with $21.5 billion at the end of March, said Tuesday it would begin using Aladdin Wealth, a version of the asset manager’s tools. The software will enhance the investment manager’s risk analytics for bespoke solutions it creates for high-net-worth and institutional investors in its Wealth Advisory division, the company said.
"Aladdin's risk management capabilities help differentiate our offering in the marketplace by allowing us to assess client risk in a more effective and efficient manner. It also emphasizes our commitment to providing financial advisors with the investments, technology, and service they need to remain focused on helping their clients achieve better outcomes," Jason Moore, the chief solutions officer at Brinker Capital, said in a statement.
Advisors often seek the help of TAMPs when the investment management needed by clients requires more expertise or resources than they have. Still, as much as 62% of advisors rely on their own research and portfolio construction even though only an estimated 7% of practices have the team in place to do that effectively, according to Cerulli Associates, a Boston-based research and consulting firm.
Just 12% of all advisors outsource investment management entirely and only 38% rely at all on model portfolios created outside their own practice, according to another report. Perhaps that’s why last year researchers affiliated with BlackRock found that the portfolios of nearly 10,000 financial advisors had a considerable “home bias.”
In addition to potentially better investment outcomes, advisors will also be able to leverage Aladdin as a prospecting tool.
Advisors who use Brinker Capital will gain the ability to analyze the account holdings of prospective clients, show them how their portfolio is likely to react under certain scenarios and conditions, and then make recommendations — including that they might be better off with Brinker Capital managing their portfolio.
The risks and exposure analysis can be done at the asset class, sector, geographic and portfolio level, whichever is most appropriate given the client and conversation.
Aladdin Wealth will also allow the advisors to analyze their own book of business managed by Brinker Capital and track investors’ progress toward goals.
"Transparency into risk has never been more important as we all grapple with the broad-reaching impacts of increased uncertainty," Woo Fung Kwong, the co-head of Aladdin Wealth Tech, said in a statement.
BlackRock, which managed over $7 trillion as of January, has been creeping closer to the wealth management industry, both with Aladdin and its model portfolios. In December, BlackRock announced its model portfolios would be available on 55ip, a platform advisors use to create their own models and strategies. The partnership was the first of its kind, at least between 55ip and an asset manager.
Model portfolios might be a boon for asset managers looking for ways to help advisors while adding a means of distribution for their own funds.