Open Architecture

Posted on: March 5th, 2013

One of the defining characteristics of Seaside Wealth Management is its “Open Architecture” approach to investing. Open architecture involves the utilization of multiple, external investment managers and vehicles. It is quite different from the common practice of selling proprietary investment product (funds managed by an affiliate organization) or the selling of funds from a list restricted to “partners” willing to pay a fee for a place on an investment platform.Open architecture gives us the freedom to choose investment managers from an extraordinarily wide variety of options. It also preserves the objectivity necessary to choose those solutions which best meet the needs of our clients. Every month, we download performance data on 28,000 mutual funds and 6,000 independent investment managers. None of the investment vehicles we consider are in any way affiliated with Seaside. None of them pay us a fee for marketing their investment products to our clients

– a common practice at other banks and brokerage houses, even those that advertise “open architecture”. If we were in the business of marketing an investment product manufactured by an affiliate it would be difficult, maybe impossible, for us to divest that product if it ever failed to perform. It would also be very awkward to discuss alternatives managed by other organizations. Even if we were considering a list of external funds that paid us a variety of fees for inclusion in our accounts, those fees would influence our choices.

At Seaside, we accept only one fee for our investment services – the fee paid by our clients. This makes it easy for us to avoid a division of loyalties in the choice of investments for their accounts. If a manager fails to perform, or if we find a better alternative, we are not constrained from making a change. We serve only one master – our client.

Open architecture also gives us the freedom to use the widest variety of investment vehicles. Separately managed accounts offer full transparency, relative tax efficiency and direct access to both small investment boutiques and the largest firms. Mutual funds offer professional management and easy access to global markets. Index funds provide low-cost, tax-efficient exposure to a fully diversified portfolio. Exchange Traded Funds (ETFs) allow for the full flexibility of market trading, low costs, and certain tax advantages. Most of our competitors emphasize one or maybe two of these vehicles to the exclusion of all others. Many have fee arrangements that make consideration of low-cost alternatives impossible. At Seaside, we find that each of these vehicles has its own set of strengths and limitations, but we have the freedom to find the right combination for your investment needs.

Seaside’s choice of open architecture is not a stage in its evolution as an organization; it is a very conscious commitment on our part to align our interests with those of our Wealth Management clients and to utilize all the tools available to meet their needs.

Open architecture makes us different. We think it makes us better.

Investments are:
Not FDIC insured
Not guaranteed by Seaside National Bank & Trust
Subject to risk and may lose value