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Best Blogs of the Week

Posted by Anu Heda on Nov 07, 2011, in Best Blogs of the Week , tagged with , , ,

In a week where some political pundits are predicting a Greek revolt, I thought we’d see more blogs tackle this issue and the potential impact on US equity markets.  Instead, we have a single Halloween reference and retirement talking points.

  1. US Funds – This post provides some a quality economic comparison between China and the US.  It provides both reasons to think of China as a compelling long-term place for investments and reasons to be cautious.
  2. Russell – This post provides three excellent talking points for an advisor selling retirement plans.
  3. AllianceBernstein – This post provides two clear ways to try to reap excess returns with less volatility typical in emerging markets.

Private Label ETFs

Posted by Anu Heda on Nov 04, 2011, in Thoughts , tagged with

Earlier this week, I read more about private-label ETFs in Registered Rep. What are the primary attractions for independent advisors to present investors with customized ETFs? After all, there are more than 1,100 ETFs available (as of January) and perhaps as many as 1,400.

Here are three ways I can see how advisors may benefit from customized ETFs.

  1. Simpler investment vehicle – As mentioned in the article, separate accounts may be difficult for certain investors – either due to paperwork or account minimums.  ETFs require less (none?) paperwork and very low minimums.
  2. Elevated Profile – ETFs have an elevated profile via successful marketing from Vanguard, BlackRock, and State Street. Investors know of them (more so than separate accounts).  If an investor is trying to get comfortable with his FA, then an ETF is a simple starting vehicle.
  3. Public Track Record – For an FA building a brand on investment prowess, the ETF is a straightforward way to publicize performance.  If an advisor has 50 clients, with 50 separate accounts, then he can’t really discuss performance in any meaningful.  An ETF will show performance publicly.

I disagree strongly with one reason for launching customized ETFs.  The article quotes a few advisors as they discuss reaching new clientele.  That seems improbable.  An investor seeking out new investment vehicles will probably be dubious (to downright dismissive) of new ETFs from advisor firms, considering the thousand-plus options already available.

What do you think?  Send us a message here.

Success Lessons from an RIA

Posted by Anu Heda on Nov 04, 2011, in Thoughts , tagged with

I met with the founder of a successful RIA practice last week.  His business is over 20 years old with about 1% client attrition (stunningly good to me).  As we spoke about how his business arrived here today and what may help grow the practice, he had three reasons for his continued success.

  1. Start small and prove performance – He mentioned that he’d often start with small slices of investable assets; something like $10,000.  And over time, he’d ask if the client was happy with his firm’s performance and similarly content with performance of her other assets.  Often she’d say yes about his firm and no about other firms.  Then she’d move additional assets to his firm.
  2. Out-service the competition – He believes that most of his competition spends too little time with clients.  He goes to great lengths to visit each client quarterly.
  3. Knowledge versus expertise – He built his firm to be knowledgeable about broad market situations and events, and to have extremely specific expertise in one investment strategy.

It’s always great to re-learn those lessons.  They apply pretty closely to product manufacturers as well.

Why Don’t More Firms Care About Mobile Sites?

Posted by Mike McLaughlin on Nov 03, 2011, in Thoughts , tagged with , ,

Last week we presented at the MFEA Council meetings in Chicago. The topic: mobile strategies.

We covered a lot of ground in our presentation – device and mobile Web usage trends, sites vs. apps, client-facing tools, mobile efforts to support field personnel – which we’re more than happy to share if you drop us a line.

The subsequent roundtable conversation covered a lot of ground as well. To my surprise, though, one topic got very little airtime as firms shared strategies with one another: mobile Web sites.

A fund profile on American Century's mobile site.

Back in 2010, Dalbar noted that 24% of asset managers have a mobile Web site. Current estimates lie in the 25-35% range, so there hasn’t been a big move. Why the lack of interest? I see three themes:

  • Mobile Sites are Boring: iPads and apps are sexy. A mobile site, on the other hand is purposefully designed to be a simplified, streamlined experience (single column, limited graphics/multimedia) that delivers the basics (product info, commentary, etc.). There’s not as much room to innovate, so firms see the sites as a snoozer.
  • There are Bigger Fish to Fry: Right now mobile-generated Web usage comprises 7% of all Web traffic. Some firms see that as a big number, some see it as small (especially intermediary/institutional managers). So, when it comes to budgeting, a mobile-optimized site simply misses the cut.
  • There’s Hope for Convergence: 6,500 different mobile devices exist. The Android, Apple, and BlackBerry operating systems all maintain significant market share (20%+). The marketplace is fragmented. But as more people get smartphones and tablets with ever-faster connections, some firms hope that, eventually, most bases will be covered with a single site.

But each of these lines of thinking is flawed. While less sexy than apps, mobile sites currently have the greater potential to reach clients and prospects (no buying a tablet and then searching the app store). The mobile share of Web traffic is only going to increase. And the hoped-for convergence of operating systems and devices is not going to come nearly fast enough.

Bottom line: more firms are simply going to have to bite the bullet here and implement an effective mobile site.

Learning About Recordkeepers Online

Posted by Anu Heda on Nov 02, 2011, in Thoughts , tagged with , , , , ,

In the previous post, we examined the experience of searching for a recordkeeper. In this post, we’ll consider another common experience – the referral. Many people will look for a referral from anyone they deem qualified to provide a starting point.  With a referral mindset, I asked a few DCIO wholesalers to recommend recordkeepers for small and new plans.  I heard three firms repeatedly (and reasons why):

  1. Ascensus – Low-cost, open architecture
  2. Principal – Big, hands-on, and helpful sales force
  3. John Hancock – Good, easy-to-use technology

From reviewing the firms’ Web sites, online marketing has not been a major focus to-date.  None of the top firms’ sites provides a comprehensive pre-sale experience.

 … [read more]