Why Portfolio Delivery Now Defines Advantage

A profound shift is underway in financial services — now coined “the great convergence”¹ — as asset and wealth management become more integrated. Investment and wealth management firms on both sides are moving closer to end investors as competition shifts from selling standalone products toward “an ability to deliver solutions at the level of the whole portfolio,” according to consulting firm McKinsey & Company. As the traditional separation between product manufacturing and portfolio advice breaks down, asset and wealth managers are effectively moving into each other’s territory.

Investment Firm Considerations

First, scale no longer increases the likelihood of profitability. Rising costs mean profit as a share of assets under management has fallen by around 19% since 2018 and is expected to decrease by another 9% by 2030, according to PwC.² In response, asset managers are seeking to build client relationships closer to end investors, while wealth managers are trying to differentiate beyond basic market exposure by building asset management capabilities. 

Second, the traditional divide between public and private markets is blurring and prompting the need for tighter integration between asset management and wealth management capabilities. Private equity, credit, digital assets and infrastructure, among other alternative assets, are now central to how investors seek returns, income and diversification. New investment vehicles — such as semi-liquid funds and interval funds — are making private market and other alternative assets more accessible. In response, advisors are increasingly blending public and private holdings into unified portfolios.

Third, asset managers are targeting the vast pool of high-net-worth wealth. This creates a two-way pull: asset managers need scalable distribution and advisor trust, while wealth managers need support and tools to use complex private strategies effectively, resulting in the use of partnerships or M&A deals to boost scale and scope³ as well as platform integrations to enable a total-portfolio approach. 

Finally, client expectations are accelerating this convergence. Clients are demanding solutions, not just products, with the focus shifting to outcomes such as funding life goals, managing drawdowns and balancing increased returns with portfolio resilience amid market volatility. 

“This demands an adaptable, total-portfolio approach that blends exposures and considers taxes and cash flow,” explains Bryan Dori, Head of BNY Managed Account Solutions. “Competitive advantage is increasingly about helping advisors leverage the technology that is accelerating this shift and can also help assemble better portfolios for clients in a coherent and systematic way — embedding investment tools deeper into the advisor’s workflow and enabling portfolio personalization.”

BNY capabilities include Managed Account Solutions that provide a fully integrated technology and service platform for asset and wealth managers developing personalized investment solutions across all asset classes and product structures.

The Rise of Integrated Account Architectures

The convergence of asset management and wealth management is accelerating the shift away from standalone mutual funds and toward flexible, integrated account structures. Increasingly, the wrapper is less like a product and more like portfolio infrastructure. As a result, Separately Managed Accounts (SMAs), Unified Managed Accounts (UMAs) and multi-sleeve architectures are gaining critical mass, according to McKinsey & Company.⁴

SMAs are important because they facilitate scalable personalization. Unlike mutual funds, SMAs allow direct ownership of underlying securities. This enables tailoring — most visibly through direct indexing, which brings tax-loss harvesting to a broader audience.   

For asset managers, an SMA is a vehicle for delivering a more customized wealth service rather than simply a distribution format, underscoring how asset capabilities are being repurposed within wealth-led portfolios.

UMAs and multi-sleeve accounts are crucial as the container for a modern, blended portfolio. They can hold assets across the liquidity spectrum — from public stocks to semi-liquid private market assets — and can potentially avoid oversight challenges that can result from fragmented reporting.

The sleeve approach is evolving into a new competitive tool for large multi-asset managers and specialists to leverage by powering specific sleeves — private credit, equity, or income, for instance — within a broader portfolio overseen by the wealth manager. This can create a more modular, efficient way to deliver investment expertise as asset and wealth roles become more tightly integrated. 

BNY provides deep integration with all counterparties including distribution intermediary platforms, such as wire houses, turnkey asset management programs, regional broker dealers and banks, to help simplify manager-traded separate accounts and model delivery.

Moving the Advisor from Product Provider to Portfolio Architect

Advisors are moving from selecting individual funds to adopting solutions delivered through platforms that use a model-of-models approach, where an asset or wealth manager creates a top-level portfolio comprised of multiple specialized model portfolios instead of individual stocks or bonds. For wealth managers, models offer a way to scale cutting-edge advice, supporting the broader hypermarket trend in which firms aim to provide one-stop shopping for active, passive and private market exposures. PwC believes hypermarkets are set to win almost half of new asset management revenues by 2030.⁵

These integrated account architectures are gaining relevance because they directly address the operational constraints created by the convergence of asset and wealth management.

#1

Access to Alternatives: If private markets are to reach a wider set of investors, portfolio frameworks must accommodate semi-liquid exposures. New vehicles such as interval and evergreen funds are increasingly designed with managed-account integration in mind.

#2

Operational Unification: Clients tend to prefer consolidated experiences across investing, banking and lending. Managed-account architectures provide the backbone for delivering a single, consistent and unified view for clients as wealth managers broaden their service proposition.

#3

The Barbell Portfolio Logic: These accounts align naturally with the common strategy of pairing low-cost passive exposures with higher-fee, higher-alpha potential strategies, presenting them as a single solution rather than multiple disconnected holdings.

As asset and wealth models converge, platforms and technology become central to achieving a competitive advantage. Integrated models, real-time data and seamless workflows provide a foundation for SMAs, UMAs, and multi-sleeve architectures. The choice for firms effectively comes down to whether they build proprietary systems or partner with a specialist.

BNY delivers business process outsourcing that helps control costs while scaling to meet demand. Our solution provides transparency across the entire asset and wealth management continuum.