How Funds Can Enlist Financial Advisors
March 22, 1999
NEW YORK - There are currently more than 14,000 financial advisors in the United States managing roughly $1.6 billion. Meanwhile, 2,500 new financial advisors enter the business each year and 1,500 drop out. So, how does a mutual fund company cultivate such a fragmented and fluid audience? Mutual fund executives say there are no simple answers.
However, companies can try to solidify ties with this channel by getting out in the field and becoming acquainted with individual advisors. The place to start is meeting financial advisors at industry conferences - as many as 25 a year, executives say.
"These are the Superbowls of the business," said Eugene Daly, vice president, western region, for ICON Funds of Englewood, Colo. Daly and other industry executives spoke here recently at a conference on mutual fund supermarkets.
But it is not enough to just show up at conferences, executives said. A strategy is required.
Get a list of attendees beforehand, choose ten or 20 key people and invite them to dinner or an event at which the fund's key executives are present.
"Put your top managers in front of them in a venue that doesn't compete with the conference," Daly said. It is a sure way to make an impression on financial advisors about the fund's unique characteristics and strengths, he said.
Holding small seminars throughout the year and personally calling on financial advisors with sales ideas is also effective, industry executives said.
"Talk to advisors, tell them about your fund and its managers - and ask them questions," said Richard Sincere, president of Sincere & Co., a broker/dealer in Holliston, Mass. Once you get to know the players, get to know their concerns, said Steve Dunlap, vice president, marketing products division, CDA/Wiesenberger of Rockville, Maryland. CDA/Wiesenberger is a Thomson company as is Securities Data Publishing, the publisher of this newsletter.
William Thomas, senior vice president of Scudder Kemper Investments' financial intermediary services, also said that working with financial advisors requires getting to know them personally.
"You cannot wholesale to these people," Thomas said. "Working with financial advisors is by far a very difficult channel. The markets are all different, and our products are all different in those marketplaces. If you speak to six different financial advisors, you get six different stories."
Ellen Georgevich Reed, national sales director to the institutional/financial advisor market for Victory Funds of Cleveland, Ohio, said her company tackles the task of having to choose from so many financial advisors by dividing them up into market segments based on compensation and assets under management.
Victory looks for fee-based advisors with $25 million or more under management, whose clients are using mutual funds as their primary investment vehicles or as a niche investment vehicle. Victory wants to work with these kinds of financial advisors because they tend to work very closely with clients, Reed said. Victory Funds likes being part of this kind of close partnership and high level of customer service, Reed said. These kinds of financial advisors also tend to recommend that their clients put their assets in a broad range of asset classes, so it is easy for Victory to fill at least some of these needs, Reed said.
Scudder Kemper tries to service financial advisors by zeroing in on a few points it has found to be of most interest to them: performance, expense ratios, style consistency, portfolio manager tenure, tax-efficiency, brand recognition and good sales and marketing ideas - including original research.
Once a fund company has found financial advisors who are a good fit and who are willing to market its funds, it is critical to maintain the financial advisors' enthusiasm by making it easy for them to work with the fund, Reed and Dunlap said. Make sure financial advisors have the tools they need to properly present your fund's story, Dunlap said. The easiest place to make those marketing tools available is on the fund's web site, he said.
A mutual fund should also maintain open, active communication channels with financial advisors through a toll-free number, monthly conference calls, monthly mailings and a website link, industry executives said.
"Make it attractive and easy for financial advisors to recommend your funds," Dunlap said.