This is a summary of a session from the Money Management Institute’s 2012 Fall Solution Conference. This is part two of a two-part series. You can read part one here.
- Bill Broderick, Principal, Investment Advisory, Edward Jones.
- Steve Raimer, Partner, Director of Due Diligence, Lord Abbett & Co.
- Jeff Holland, Executive VP, Head of Capital Markets, Cole Real Estate Investments.
- Anthony Ciccarone, Managing Director, Head of National Accounts Business Development, Nuveen Investments.
What is the makeup of your analyst team?
Raimer’s due diligence team is comprised of six people, all with very different backgrounds. Some are CFAs, some are MBAs, there’s a former wholesaler, a former relationship manager, and a former product manager. They play off each other’s strengths and also do a lot of cross training, he said.
Managing a portfolio manager’s time is always a challenge, Raimer observed. If an analyst insists on meeting with the portfolio manager, Raimer first tries to deflect, by reminding them that they would rather the portfolio managers spend their time researching future trades. Everyone on the team can deliver the introductory discussion around every investment strategy that they offer and this takes some of the workload off the portfolio managers. They also have portfolio specialists and product managers and try to do everything they can to only take the PMs away from their desk when they really need to, he insisted.
For managers with a lot of products, it helps to focus on just the ones that best match with the sponsor’s current needs, Ciccarone said. Give the distribution team just a few things to focus on and don’t try to sell everything, he advised.
For smaller managers with fewer products, it’s important to be smart about who you call on, Holland insisted. Client segmentation is a huge piece of the puzzle. There are over 400,000 financial advisors in the country, so you can’t call on all of them!
At Cole, they only have three products and they’re all commercial real estate products in a managed account wrapper, which is unique, Holland claimed. Some of the larger independent broker-dealers have large home office staffs that can help you in your efforts and get you in front of the right financial advisors. They also use a lot of webcasts to leverage the time of their salespeople. Holland reported that they make 40,000 phone calls to advisors every month!
What online tools do you use?
Lord Abbett is engaged with social media such as YouTube and Twitter, Raimer said. But in the end, they’re just alternate vehicles to get out their marketing message. It’s the content that is important, he emphasized.
Lord Abbett on Twitter
FAs: One list you should definitely check twice is our Year-End IRA Checklist. Find IRA opportunities for clients @ http://t.co/3hLfk66A
Nuveeen has a 1-to-1 ratio across all channels, Ciccarone reported. They also try to leverage their call centers and tiers of wholesalers.
Cole also a 1-to-1 ratio, but they are not built out on wirehouse or regional side just yet, Holland said. They make sure that their external wholesalers are fully supported. They supplement their sales force with a team of virtual wholesalers that rely primarily on webcasts to communicate.
Lord Abbett is close to 1-one-1 with 73 internal wholesalers and 60 external. They are augmented by a team of six portfolio specialists who are all CFAs, Raimer said.
Are asset managers spreading internal wholesalers too thin? – Investment News
Advisors Rank Top 5 Internal, External Fund Wholesalers: Lord Abbett, MFS top external wholesaler list while Franklin Templeton, PIMCO top internal list – AdvisorOne.com
Four Themes to Watch in Asset Management Distribution – Lattice-Engines.com
What Does an External Wholesaler Do? – WiseGeek.com
What Does an Internal Wholesaler Do? – WiseGeek.com
There is big difference between small managers in the 40 Act track versus the non-40 Act track, Holland declared. Managers in the mutual fund track need a very interesting story as well as great performance. No one really needs another large cap value fund. It’s important to communicate what you are bringing to the table. What is distinctive about your product?
Holland argued that small managers could also be viewed as having business risk. A small manager could gain an advantage and play down their size or lack of track record if they had an innovative product or a different asset class, he said.
One tip for small or emerging managers that Holland offered is to find a champion at the broker-dealer who will carry your product forward. It could be a due diligence officer or someone on the business side, but finding someone to fill this role could be the difference between getting onto the platform and languishing in the huge stack of product literature on the analyst’s desk, he said.
What are some key criteria that an emerging manager should have before trying to get onto a platform?
Having enough resources to support the amount of assets you plan to bring in is key, Raimer explained. Prior to his current position, he worked on the sponsor side in platform management and had the opportunity to launch a few smaller managers. An asset manager who is going to get into the platform business must be prepared to make an upfront commitment to hire necessary staff now. They can’t wait until the assets come in and then try to hire people. An initial investment is required in order to have enough people on the ground, he said.
Check out some of the other wealth management content on WM Today
- A Manager’s Guide to Breaking into Sponsor Platforms
- Asset Allocation: Is Modern Portfolio Theory Dead?
- Are ETFs Bad Medicine for Advisors?