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Asset managers have lately begun changing tack in their attempts to woo financial advisors, offering more of what they call “thought leadership”—educational content and tools that help advisors run their businesses—rather than product-oriented information. The idea is to build relationships with advisors and broker/dealers in the hopes that it will lead to greater interest in and sales of their products.
“We thought most people would reward us for that,” said Bill Connolly, head of global distribution for Putnam Investments, referring to the firm’s FundVisualizer tool, launched in April. FundVisualizer is an open-architecture tool that allows advisors to research and compare over 10,000 mutual fund and ETF offerings through a web-based interface, not just Putnam’s funds.
Joe Dougherty, partner and head of retail products at Highland Funds, hopes that with Highland’s new resources, advisors will see the firm as doing something beyond just trying to manage money and will want to invest with them. The firm plans to roll out a redesign of its website within the next two months, which will include white papers, video, fund snapshots and a fund analytic tool further down the road. Offering these resources, especially through new technology, is a way for the firm to touch more people and get Highland’s name out there, Dougherty said.
These days, distributors are requiring potential partners to go beyond just performance, with many looking more closely at what kind of “value-add” they can bring to their advisors, Connolly said. The ability to add value and help FAs expand their businesses has become an increasingly important service that b/ds grade asset managers on, he said.
“The industry has become increasingly competitive,” Connolly added.
Many b/ds confirmed this. Todd Pack, president and chief operating officer of Carlsbad, Calif.-based Financial Advisers of America, said that because there are so many money managers in a given segment, his firm is going much deeper in their evaluations of managers. The firm is drilling down into what additional resources they can deliver, such as marketing support, webinars, and analytical tools.
“More and more people fancy themselves as asset managers,” echoed Rob Dearman, senior vice president of advisory practice and platforms strategy at independent b/d network National Planning Holdings. With more and more “junk” out there, as he calls it, b/ds need more criteria to judge them. This type of content has taken on new importance today and is more widespread as digital technology has made it easier to access.
Greg Gohr, director of investment products and services at Commonwealth, said in the post-recession environment, there’s more of an expectation among b/ds for money managers to go above and beyond. Competition is tough, and asset managers are realizing that they can’t just get in front of reps with a high-performing mutual fund. They have to demonstrate that they understand the larger issues surrounding client management, he said.
“It’s recognition that in the current market environment, advisors need to have much broader conversations,” Gohr said.
Market Commentary and Education
To that end, many firms have been providing not only insight on products, but also on broad trends in the industry and the markets, Gohr added.
About a year ago, Guggenheim Partners launched “Market Insights,” bi-weekly commentaries on market developments, the economic climate, and the investment landscape from Chief Investment Officer Scott Minerd. With about 15,000 users, the “Market Insights” are designed to provide insights into how to navigate the markets and provide actionable ideas for advisors and investors, said Steve Baffico, senior managing director, Guggenheim Funds Distributors.
This type of thought leadership creates a different relationship with the advisor, one that creates more of a demand pull from advisors, Baffico said. FAs may see Guggenheim as the market leader in certain areas, so they’re coming to the fund company, rather than the other way around, pulling down the content and wanting to create a partnership with the firm.
Guggenheim also offers advisor education through an academy-type platform, covering such topics as retirement, decumulation strategies, using alternatives in a portfolio, best practices for working with high-net-worth clients, and women in investing. In April, the firm announced a partnership with Dorsey Wright & Associates to develop research on unit investment trusts (UITs).
In addition to its white papers, manager insights, and videos on its website, Putnam Investments recently launched the Putnam Institute, which will conduct ongoing research on investment theory and practice related to retirement and educational savings and the provision of lifetime income. The Institute is lead by Dr. W. Van Harlow, research director. The idea behind it is, if Putnam can provide distinct intellectual capital, this can be another thing that differentiates the firm in the marketplace, Connolly said.
In April, Invesco rolled out PlanForward Foundations, a series of toolkits designed to help FAs grow their defined contribution business. While Invesco had offered six modules to help reps with DC business previously, the firm redesigned the educational tool, making it more interactive and web-based. Now there are three toolkits including “Finding Your Place in the Defined Contribution Market,” “Generating Leads and Prospecting” and “Putting Fiduciary Responsibility in Action.”
“If we can help build your practice, then we can build our relationship,” said Felix Touchard, retirement channel marketing director, Invesco.
DWS Investments takes advantage of its parent company Deutsche Bank to provide an outside-in look at trends and market conditions, said Michael Woods, CEO and U.S. head of DWS Investments. The firm offers white papers covering different asset classes; a monthly municipal opinion, which it expects to expand to taxable fixed income and equities; and quarterly video updates from portfolio managers. Also, a series of reports called “Unprecedented Times” covers how to deal with higher taxes, inflation and interest rates in a client’s portfolio.
This month, NPH is working with fixed income managers from Lazard and J.P. Morgan Asset Management, partners of the firm, to deliver content to its advisors surrounding debt, fixed income and the debt ceiling. “I feel like we’re throwing pearls to the swine if we don’t take advantage of these guys,” said Dearman.
But many asset managers are looking beyond even this thought leadership type of service to provide advisors with tools to help them manage their clients’ portfolios.
Ben Pousty, senior analyst at Corporate Insight, said firms are creating such tools to make looking through products easier, and as a way to sell the client on their mutual funds.
For example, Connolly said Putnam hopes to challenge the incumbents with its FundVisualizer, a web-based tool for evaluating the universe of mutual funds and ETFs, not just Putnam’s proprietary funds. There are a lot of choices out there in terms of mutual funds, and “we have to earn the business,” Connolly said. The idea is that if Putnam can help FAs better dissect their book of business, it’s an opportunity for people to recognize the quality of Putnam funds.
Once Highland gets all the basics up and running on its new site, the firm will also look at launching a similar fund analytics tool, which would allows FAs to load up various funds and run analytics on the portfolio, said Dougherty. The tool is in the conceptual stage now, and Highland is looking for the right vendor to provide the fund data. Dougherty hopes the tool will add value to advisors because they’ll be able to see how one fund fits into a larger portfolio.
Leveraging New Technology
Asset managers say that leveraging new technology, such as the web, video, social media and tablet computers, makes it easier to deliver such value-add content to advisors.
For example, advisors can take Highland’s fund comparison tool to the next level if they have an iPad, Dougherty said. This way, FAs can run analytics on a client’s portfolio in real time. “Investors and advisors are so sensitive to timeliness,” he said.
OppenheimerFunds launched a digital campaign in February—“globalize your thinking”—aimed at supporting advisors and providing information to share with clients, said Marty Willis, chief marketing officer. The initiative includes videos of fund managers discussing changes in the economy and the opportunities it presents investors, articles and animations. All content is accessible through the web, mobile technology and tablets. The content can also be shared through social media sites including YouTube, Twitter, RSS feeds, LinkedIn and Facebook.
“By articulating how macro trends (like population, industrialization, urbanization) create opportunities for companies that are well positioned to capitalize on these trends, we explain a bit about how we develop and manage funds,” Willis said. “This helps advisors understand our thinking, and our funds more fully, developing the relationship and ideally increasing the likelihood that they will recommend our funds.”