8 Great Distribution Lessons for Asset Managers


The top tier asset management firms have demonstrated success in their efforts at sales and product distribution.  They also oversee a loyal advisor base and have solid partnerships with key accounts.  Understanding their best practices and incorporating them into your firm can help you on the road to emulating their success

This article is a summary of a panel session from the Money Management Institute’s 2014 Annual Convention.  The topics that were covered included common traits of top distribution teams, benefits of different distribution models, training and certification recommendations and how to maintain profit margins in an environment with rising distribution costs.

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Has Rep as PM Growth Peaked? (2/2)

This is a summary of a panel discussion from the Money Management Institute’s 2012 Spring conference held in Chicago, IL.  This is part 2 of 2.  You can read Part 1 here.

Moderator: Jay Link, Managing Director, Merrill Lynch

Panelists:
Lorna Sabia, Managing Director, Head of Managed Solutions Group, Merrill Lynch
James Walker, Head of Consulting Group, Morgan Stanley Smith Barney
Matthew Witkos, President, Eaton Vance Distributors.  Chairman of MMI.

Is your firm coming out with any new product offerings?

According to Witkos, Eaton Vance has developed a new product that they are calling Exchange Traded Managed Funds.  It is like an ETF since it trades like a stock, except without the transparency of an ETF so that the money manager’s intellectual property is protected.

What is the sponsor perspective on mutual fund velocity?  

No one wants advisors over-trading mutual funds, Walker commented.  Firms look at trade velocity and try to keep it within a certain range, he said.  The industry should be more aware of the difference between selling mutual funds individually versus fitting them into a larger portfolio.  Walker thinks that market velocity won’t be going away any time soon.
Sabia feels that velocity is a complex topic and more data is needed to determine the impact that it might have on a portfolio.  She also stated that she believes that sponsors, advisors and managers all “own” the issue of velocity and everyone should work together to deal with it.

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Has Rep as PM Growth Peaked? (1/2)

This is a summary of a panel discussion from the Money Management Institute’s 2012 Spring conference held in Chicago, IL.  This is part 1 of 2.  You can read part 2 of 2 here.

Moderator: Jay Link, Managing Director, Merrill Lynch

Panelists:
Lorna Sabbia, Managing Director, Head of Managed Solutions Group, Merrill Lynch
James Walker, Head of Consulting Group, Morgan Stanley Smith Barney
Matthew Witkos, President, Eaton Vance Distributors.  Chairman of MMI.
Has the growth of RPM programs peaked?  According to Dover Research, five years ago, there was $1.2 trillion of client assets in managed solutions and RPM/RAA combined were less than 30% of that total.  Today, total managed assets have grown to $2.4 trillion while rep-driven programs have increased their share to 40% or almost $1 trillion.

How important is RPM to your firm?

RPM is Morgan Stanley’s fastest growing program, Walker reported, with $560 bil in all advisory programs, $150 bil in RPM globally.  Major change in past few year has been change from individual equities (now 34%) to include ETFs, mutual funds, etc.  This is a great solution for Reps that consider themselves to be active allocators.  Trend: move towards discretion, driven by FAs practice management, customers want outcome based investing.  From a regulatory sense, it’s easier to deliver on fiduciary duty.
Sabbia joined the Managed Solutions Group seven months ago.  At Merrill, RPM is called the Personal Investment Advisory (PIA) program and was launched in 1996, now $105 bil AUM.  Approximately 4,500 FAs leverage the program and they’re segmented into three buckets: it’s their fastest growing segment with a $15.7 bil net increase last year and they’re on track to beat that number this year, she said.

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FundFire: Bank of Hawaii Launches $2B UMA Program

Article published on Fundfire on August 12, 2010
By Tom Stabile

The Bank of Hawaii is the latest wealth management outfit to ride the unified managed account wave, unveiling a new program that opens the door to third-party separately managed account managers for the first time. The Honolulu-based bankexpects to shift more than $2 billion of its $6.6 billion in client assets over to the new UMA program, which will include SMAs, mutual funds and exchange-traded funds (ETFs) in its inaugural lineup.

The commercial bank’s Investment Services Group touts itself as the largest trust and asset manager in the Aloha State’s financial services market. To date, the bank has funneled most of its wealth management services through its proprietary investing vehicles, including internal mutual funds and individual bond and equities selection handled by its own portfolio managers. The new UMA takes a much bigger step toward open architecture investing, says Steve Rodgers, the bank’s CIO.

“Right now we’re estimating that about $2 billion of our existing accounts will be converted over,” he adds. “We’re in the process of converting existing accounts over the next several months.”

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