Using FormulaFolios
Smart Investing for Smart Advisors
FormulaFolios are available via a number of custodians such as, Schwab Institutional, TD Ameritrade, Fidelity, and Pershing. However, the easiest way to use FormulaFolios is through Folio Institutional, a technologically sophisticated Unified Managed Account (UMA) platform for RIA firms and independent broker/dealers.
Why UMA’s?
Many advisors are familiar with Separately Managed Accounts, but few are familiar with Unified Managed Accounts. We have chosen to offer FormulaFolios primarily through a UMA platform for many reasons, some of which are listed below:
- In an SMA, the introducing advisor (the person who brings the clients to the table) is forced to move client assets under the discretion of the selected money manager. This presents a number of problems because the assets can only be counted by one firm. Also, it is not the advisor who is working directly with the client when using an SMA. This makes it rather difficult to grow an independent firm and truly have control over client assets.
- Each SMA needs a separate account number, which creates confusing statements that often are larger and more complex than many investors desire.
- SMA’s can be expensive and require high minimum investments. It often takes $100,000 or more to have just a single SMA. To have true diversity for clients can often take $500,000 or more. With accounts under $1,000,000, the costs to both client and advisor can be so expensive it is difficult to justify the use of an SMA altogether.
There is a Smarter Way
Screenshot of the FOLIO Client Website
Through our innovative Unified Managed Account platform we can turn all of those negatives issues into positive ones. When using an UMA:
- All assets stay with the introducing advisor’s firm and the assets are reported only on their ADV.
- A UMA is a “white-labeled” account. This means the advisor (not the manager) is the person listed on the statements.
- Most UMA’s (including Folio Institutional) have low client minimums and offer access to multiple managed strategies without increasing the minimums. So for as little as $25,000 FormulaFolio investors can get an extremely sophisticated investment portfolio.
- UMA’s are very cost effective. As the name would imply, a Unified Managed Account is one account. By leveraging technology, the money manager (FormulaFolios) is able to manage various “model” portfolios and execute these across all investor accounts in an omnibus fashion. This is how we get superior pricing, execution, and flexibility.
By using Folio Institutional, we are also able to offer Turnkey consolidated statements, performance reporting, fee billing, and sophisticated tax lot accounting. The entire account opening process is done online with minimal paperwork and automated electronic storage of documents that meets SEC compliance standards.
To learn more about our innovated UMA platform and how it can streamline your business, and simultaneously offer sophisticated, intelligent portfolio management for your clients; just visit the contact page to find the FormulaFolios wholesaler in your region.