Most advisors would say they want to do what’s best for their clients. But if that’s the case, they better not manage their clients’ money on their own; better leave that to the home office, new research from Cerulli Associates shows. According to Cerulli’s Managed Accounts 2012 report, packaged mutual fund advisory programs returned an average of 9.9 percent over 2010 and 2011, while open programs (meaning advisor-managed programs) were up 4.3 percent over those two years. Despite the evidence that advisor-run programs are not the best option for investors, Cerulli says advisors still prefer to do it themselves. Rep-driven programs boosted market share from 34 percent at the end of 2008 to 41 percent at the end of 2011. Cerulli points out that advisors want to have discretion over their client accounts, whether performance is good or bad.

“They want to be able to explain account transactions to clients based on their own rationale, not the thinking of a managed accounts group at the home office,” the report says. “Particularly during times when the market was down, such as 2Q 2010 and 3Q 2011, advisors embraced the ability to reduce their equity positions and move into cash equivalents.” Advisor-managed programs actually outperformed the home office during these two quarters, when markets were down the most.