Finding the Keys into Sponsor Platforms (2/2)

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.

Moderator: 
Panelists:

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.

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Finding the Keys into Sponsor Platforms (1/2)

This is a summary of a session from the Money Management Institute’s 2012 Fall Solution Conference. This is part one of a two-part series.

Moderator: 

Bill Broderick, Principal, Investment Advisory, Edward Jones.  They launched their SMA program back in 1993 ($2.5 bil AUM), Mutual Fund Advisory (MFA) was launched 4 yrs ago and now has over $83 billion in assets, last year launched UMA ($1.2 billion AUM).  All programs are home office-driven with very limited investment lists.  There are no Rep as PM programs.  Research team consists of 20 analysts based in St. Louis, MO who build the fifty supported models.  All of their models are GIPS-compliant.

Panelists:

Steve Raimer, Partner, Director of Due Diligence, Lord Abbett & Co.  They are an independent money management firm based in Jersey City, NJ.  $127 billion in AUM.

Jeff Holland, Executive VP, Head of Capital Markets, Cole Real Estate Investments.  Cole has been in business over 30 years and has $12 billion in real assets.  They focus on long-term, high-quality,  income-producing real estate.  Jeff has been with the firm for two years and is the gatekeeper for their platform and is responsible for driving advisor adoption of new products.  Prior to Cole he was COO of Equity Trading at BlackRock.

Anthony Ciccarone, Managing Director, Head of National Accounts Business Development, Nuveen Investments.  Nuveen has around $210 billion in AUM.  Ciccarone has been at Nuveen since 2005 and in National Accounts for three years.  Prior to that he was in Nuveen’s Product Development Group for four years.

What is some initial advice for getting onto your platform?

Holland proposed that the industry is coalescing towards a 2×2 matrix; advisory vs commission and discretionary vs non-discretionary.  When moving into discretionary platforms and home office models there is a higher level of due diligence, he warned.  Does your firm have the rigor to get on these platforms?  Even in discretionary products, some firms require client approval before investing in alternatives such as REITs, he advised.

How can managers better position themselves versus their competition?

According to Raimer, there are three things that are critical for a manager: 1) know your products; 2) know the sponsor landscape; 3) know the competitive landscape.  Are you a better or complimentary solution?  Unless you are contacted as part of an active search by the sponsor, then being a complimentary solution is better.  A manager should be able to demonstrate to the analyst how they can improve their recommended list, he said.

For small managers, such as Coles, who are focusing on alternatives to the standard 40 Act funds, it can be more difficult, Holland described.  Coles has developed what they believe to be an innovative product, which is a managed account wrapper around commercial real estate.  When making the value proposition, you have to make analogies to existing products so they can understand how you fit into their platform.  A big challenge for innovative products can be just finding the right people to talk to at the sponsor, he said.

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