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.

Rep as PM: The Inside Scoop – Part 2

This post is a summary of a session from the MMI 2011 Fall Solutions Conference that was held in NYC. It is part 2 of a 2 part series. Click here to read Part 1.

Moderator:
Marc Zeitoun, Managing Director, Head of Distribution, Rydex/SGI

Panelists:
Jay Link, Managing Director, Managed Solutions Group, Merrill Lynch
Peter Malafronte, Executive Director, Managed Accounts, UBS
George Raffa, National Sales Manager, Asset Management Division, SVP, Raymond James

I felt that this was one of the most useful sessions at MMI because the panelists all shared lots of information about their firm’s advisory business, including statistics (my favorite) and details about the inner workings of their programs. Also, the moderator did an excellent job moving things along and asked insightful follow-up questions, which gave the panelists a chance to elaborate on some key concepts and helped make the session more interesting.

How do Rep as PM and Rep as Advisor programs work together?

Peter agreed that the two platforms are complimentary and the decision as to which to choose is mainly a client preference issue. It depends on whether or not they want to be involved in the decision making process, he said.

Also, Rep as Advisor is sometimes considered to be a “farm league” for RPM clients, Peter joked. Once a client has worked with an advisor in a non-discretionary program, has developed trust and understands how the advisor thinks about investments, portfolio construction and managing risk, that client is more likely to feel comfortable moving into a Rep as PM program, he asserted.

Marc added that the conventional wisdom says that RPM assets are the stickiest and least litigious. Additionally, they have higher levels of client satisfaction.

A Manager’s Guide to Breaking into Sponsor Platforms

“Uncovering Managers in Today’s Crowded Market: Accessing the Platform” was one of the sessions from the MMI 2011 Fall Solutions Conference.  This post is a summary of that session.

Speakers:

• Thomas Latta – Global Head of Traditional Due Diligence, Bank of America Merrill Lynch, leading the traditional asset class due diligence teams (35-40 people), both domestic and international, also serves the entire organization including US Trust, his team provides advice and guidance around the implementation of managers. This doesn’t include portfolio construction.
• Barnaby Grist – Head of Wealth Management at Cetera Financial Group. Formed 18 months ago after three broker dealers from ING merged. Responsible for support of all advisor platform needs. Formerly with Charles Schwab.
• Greg Nordmeyer – VP and General Manager, Managed Accounts, Ameriprise Financial. $100 bil in AUM in managed accounts. Has P&L responsibility for product management, product development and research teams.

How do you formalize your expectations with managers?

In order to set expectations and improve communications, Ameriprise created a guide for managers coming into their firm, Nordmeyer explained. However, since every relationship is different, each manager can’t be handled in exactly the same way. They are all unique relationship, from large, established asset managers down to very small boutique firms.

The manager’s guide does help explain how to work with Ameriprise’s platform and includes general information about operations, sales and marketing, points of contacts, as well as answers to specific questions such as “how do the quarterly fact sheets work?”. They update it and distribute it annually, Nordmeyer said.

Latta added that Merrill Lynch has wealth management specialists in the field and their job is to identify needs for particular resources and then communicate them back to the Due Diligence Team.

Rep as PM: The Inside Scoop – Part 1

This post is a summary of a session from the MMI 2011 Fall Solutions Conference that was held in NYC last month.  It is part 1 of a 2 part series.  You can read part 2 by clicking here.

Moderator:
Marc Zeitoun, Managing Director, Head of Distribution, Rydex/SGI

Panelists:
Jay Link, Managing Director, Managed Solutions Group, Merrill Lynch
Peter Malafronte, Executive Director, Managed Accounts, UBS
George Raffa, National Sales Manager, Asset Management Division, SVP, Raymond James

I felt that this was one of the most useful sessions at MMI this year because the panelists all shared lots of information about their firm’s advisory business, including statistics (my favorite) and details about the inner workings of their programs.   Also, the moderator did an excellent job moving things along and asked insightful follow-up questions, which gave the panelists a chance to elaborate on some key concepts and helped make the session more interesting. — Craig

Rep as PM (RPM) and Rep as Advisor (RAA) are the fastest growing fee-based programs in the industry, increasing assets 40% annually over the past three years.  Any asset management firm that doesn’t have a strategy to address RPM is missing the boat.

Which term is more accurate, Rep as PM or Rep as Advisor?

Jay believes that the term Rep as Advisor makes more sense since advisors do quite a bit more than just portfolio management.  They act in some ways as both investment consultants and wealth managers.  This is an entrepreneurial community and some RPM advisors consider themselves to be style-specific and market themselves as money managers.  Other advisors see RPM as just another level of service that provides a better overall client experience.  They use discretion as a tool to deliver more holistic advice.

Peter really doesn’t like the RPM title, since advisors are acting in an investment advisory capacity. Rep as PM doesn’t adequately capture what the advisor is doing for the client. Planning, liability side of the balance sheet, trusted council. RAA is more accurate.

George feels that RPM works best for teams that are headed by a financial planner with one person that oversees the portfolios and spends 100% of their time on it.