This is a summary of a panel discussion from the MMI 2013 Spring Convention held in NYC on April 22-24.
Moderator: Mark Thomas, SVP, Head of Managed Accounts, PIMCO
- Brian Bono, Chief Investment Strategist, Investment Strategy Unit, SEI Investment Company
- Russell W. Tipper, Director, Head of Third Party Platforms, Merrill Lynch
- Fred Gaskin, Managing Director, J.P. Morgan Asset Management
How have advisor solutions changed over the past few years?
There’s been an overall shift from advisors being individual product practitioners to the Rep as PM (RPM) model, Tipper stated. This is primarily due to RPM being better at addressing client demands for more flexibility. As a result of the Financial Crisis, clients now want absolute return on their portfolios, but advisors would serve them better if they focused on providing customized advice solutions and RPM facilitates this, he recommended.
According to Gaskin, advisors have been migrating away from comparing performance of their client’s accounts against a benchmark, to having more solutions-based conversations. To support this, he explained, J. P. Morgan manages money in three ways:
- Blended benchmark-based portfolios: where they are trying to achieve a similar return with less risk, or a greater return with equal risk;
- Risk-based portfolios: which match a given level of risk that the client is comfortable with;
- Outcome-based portfolios: which has been generating the most client interest recently, where they’re trying to solve for challenging problems such as finding income, which is difficult in the current low interest rate environment. Continue reading