The courting of self-directed customers by full-service firms continues to gain momentum. Shortly after the first of the year, A.G. Edwards, one of the industry's traditional stalwarts, unveiled a program specifically designed to bring fanciers of no-load mutual funds into their fold.
The program, known as Fund Navigator, permits Edwards' clients to make purchases from a roster of no-load funds while still reaping the benefits of the broker/adviser relationship.
"We know many investors are enamored of no-load offerings but have reached the point in life where they also want guidance. This is intended to give them the best of both worlds," says Michael Scafati, head of special products at the firm.
Clients who enroll in Fund Navigator can choose offerings from a group of more than a dozen investment companies, including Scudder, T. Rowe Price, Janus, Invesco, Berger and Robertson Stephens. Scafati says Edwards likely will increase the offerings over time.
To participate, customers must invest a minimum of $75,000 in the program. They are then charged an annual fee of 1.5%. Fees are reduced on a sliding scale as assets increase, dropping to 1.25% on assets of $250,000 to $500,000, 1% on investments over $500,000, and then shrink in smaller increments on balances over $1 million.
In addition to share purchases, customers also get investment and asset allocation guidance.
"We have a fund investment committee that will assist in integrating these funds in each investor's overall investment goals," Scafati says.
Additionally, the firm will provide quarterly reports, research and comparisons of fund performance against benchmarks. Customers also will receive fund information on their consolidated statements.
According to Scafati, Edwards becomes the first major regional to make no-loads available to their clients.
The move by Edwards, according to analysts, likely will be matched throughout the full-service industry as brokers begin to compete for the business of former do-it-yourselfers who are looking for more advice. Other firms such as Merrill Lynch and Smith Barney also offer a number of no-loads.
According to a recent study by Cerulli Associates, a Boston-based consultant, investors in no- and low-load funds increasingly are seeking to do business through various adviser-based channels.
In recent months, Edwards also has signed agreements or entered into fund portability negotiations with numerous other brokerages.
