Parametric Portfolio Associates, LLC is a company that says it was founded on the principle of discipline. The Seattle-based institutional financial advisor firm also offers services to registered investment advisors (RIAs) who work with individual clients.
Between these two sides of its business, the firm has more than $265 billion in assets under management (AUM), held in client accounts belonging to individuals, high-net-worth individuals and various institutional investors. The firm employs more than 100 financial advisors that provide wealth management and investment management services.
Parametric is a fee-only firm, meaning that it only earns compensation from fees that clients pay. This structure is markedly different from a fee-based firm, which, along with taking client fees, can receive commissions from insurance sales and securities transactions.
Parametric Portfolio Associates Background
Parametric has been in business for over 30 years, having opened for business in 1987. The firm's leadership team includes CEO Brian Langstraat, chief investment officer (CIO) Paul Bouchey and head of investment management Tom Seto. Langstraat has been with the firm for almost 30 years and is a chartered financial analyst (CFA) - one of 13 CFAs at the firm.
Parametric Portfolio Associates Client types and Minimum Account Sizes
Parametric's 32,600-member client base can be divided into two sections: institutional and individual. All institutional clients work with Parametric directly, and they include investment companies, pooled investment vehicles, pension plans, profit-sharing plans, charities, municipal and state governments, other investment advisors, insurance companies and businesses. Its individual clients, who work indirectly with the firm, are split between those with and without a high net worth.
Typically, Parametric Portfolio Associates requires a $10 million minimum investment.
Services Offered by Parametric Portfolio Associates
Parametric typically manages client portfolios according to the needs of the institutional or individual investor. It does this through these high-level services:
- Systematic equity portfolios
- Tax-managed core equity portfolios
- Centralized portfolio management
- Futures- and options-based overlay services
- Balanced asset allocations
- Managed currency and duration exposure
- Speciality index strategies
In 2013, Parametric divided into two segments in order to comply with the Global Investment Performance Standard (GIPS). They offer the following services:
- Parametric Investment & Overlay Strategies
- Systematic alpha strategies
- Systematic income
- Non-tax-managed custom core
- Policy implementation overlay
- Parametric custom tax-managed & centralized portfolio management
- Global rules-based investment management services
Parametric Portfolio Associates Investment Philosophy
Parametric uses structured, mathematical and rules-based methods of analysis when it comes to choosing securities for client portfolios. It also relies on modeling and other financial technology to help determine the value of various securities.
Parametric doesn't particularly pursue a long- or short-term strategy, as the firm instead looks to prioritize the specific needs and goals of each client. The firm and its advisors take into account risks, expenses, taxes and other investing characteristics, all while attempting to maximize returns.
Parametric Portfolio Associates Fees
All client fees that Parametric charges are based on a percentage of their account's AUM. Each program that the firm offers adheres to a separate fee schedule, with riskier strategies charging higher rates. Although shown below in annual percentages, Parametric charges fees on a quarterly basis, in arrears.
|Fees at Parametric Portfolio Associates|
|Custom Core® strategies||0.15% - 0.35%|
|Fixed Income Solutions||0.08% - 0.32%|
|Customized Exposure Management strategies||0.08% - 0.55%|
|Centralized Portfolio Management strategies||0.06% - 0.25%|
|Systematic Alpha Strategies||0.25% - 0.80%|
|Liquid Alternative strategies||0.20% - 0.80%|
|*Estimated investment management fees do not include brokerage, custodial, third-party manager or other fees, which can vary in amount. Fee amounts are based on fee percentage range for Fixed Income Solutions.|
|Estimated Investment Management Fees at Parametric Portfolio Associates*|
|Your Assets||Parametric Portfolio Associates Fee Amount|
|$10MM||$8,000 - $32,000|
What to Watch Out For
Parametric does not have any legal or regulatory disclosures on its Form ADV. Parametric solely provides portfolio management services, meaning financial planning is not part of its repertoire. If you're looking for an advisor who can also help with financial planning, use SmartAsset's free tool to get matched with advisors in your area.
While Parametric is a fee-only firm, they do collect performance-based fees from certain clients. This creates the potential for a conflict of interest, as advisors could be incentivized to take excessive risks in order to capture such fees. Despite this, the firm is still bound by fiduciary duty, meaning that it is legally obligated to act in clients' best interests.
Opening an Account With Parametric Portfolio Associates
To open an account at Parametric, you can go online and submit a form on its website or call (206) 694-5575. You can also find a regional wealth manager by using the firm's interactive map on their wesbite.
All information is accurate as of the writing of this article.
Tips for Financial Planning
- Looking for a financial advisor who offers financial planning services? Finding the right financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
- Curious how much you can expect your investments to grow? Use SmartAsset’s investment calculator to extrapolate the growth of your investments over time. That way, you can see whether you're on pace to meet your goals.