Parametric Portfolio Associates, LLC is a Seattle-based institutional financial advisor firm that also offers services to registered investment advisors (RIAs) who work with individual clients. Between these two sides of its business, the firm has nearly $225 billion in assets under management (AUM), held in client accounts belonging to individuals, high-net-worth individuals and various institutional investors. The firm employs 96 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 ten CFAs at the firm.
What Types of Clients Does Parametric Portfolio Associates Accept?
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.
Parametric Portfolio Associates Minimum Account Size
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.
Fees Under Parametric Portfolio Associates
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%|
|Multi-Asset Solutions||0.06% - 0.29%|
|Customized Exposure Management strategies||0.08% - 0.55%|
|Centralized Portfolio Management strategies||0.06% - 0.25%|
|Systematic Alpha Strategies||0.25% - 0.80%|
|Volatility Risk Premium (VRP) strategies||0.20% - 0.80%|
What to Watch Out For
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.
Where Is Parametric Portfolio Associates Located?
Parametric Portfolio Associates is headquartered in Seattle, Washington at 800 Fifth Avenue, Suite 2800. The firm also has offices in:
- Minneapolis, MN
- Westport, CT
- Boston, MA
- Sydney, Australia
Tips for Financial Planning
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