Rydex's New Marketing Exec Discusses Firm's B/D Push
March 25, 2002
Lou Foran is the executive VP of sales and marketing for Rydex Funds of Rockville, Md. He joined the firm in January 2002 after serving as executive VP of sales and marketing for Legg Mason's Private Client Group.
Foran discussed his new position, Rydex's recent push into the broker/dealer channel and the firm's overall marketing efforts with Mutual Fund Market News' Andrew Brent. An edited version of their conversation follows.
MFMN: What is your role with Rydex?
Foran: As the executive vice president of sales and marketing, I'm responsible for the three channels of distribution [registered independent advisers (RIA), retail and broker/dealer], as well as our marketing effort.
MFMN: You just joined the firm in January. Was there anything from a marketing strategy perspective that you wanted to change immediately after taking the position?
Foran: You know, not really. Rydex is a very healthy company. We've been in existence since 1993 and I think the company has done quite well by bringing unique and effective products into the market.
The company is different. It was founded on the RIA business and has grown into the retail and broker channels. And that strategy has worked well so far, and we plan to stay with it. The people we have here that I quote-unquote inherited are hardworking and talented, and I think we have the right strategy in place and the right people to get the job done.
MFMN: When did Rydex get into the broker/dealer channel?
Foran: Our efforts in the B/D channel really came into being in 2001, so we're still new in the channel. As a matter of fact, we just recently finished hiring out our staff to support that channel.
MFMN: How many people have you hired for that effort?
Foran: Our entire sales and marketing team is approximately 50 people. The field sales support team for broker/dealers consists of 20 people.
MFMN: How does marketing to the three distribution channels differ? Is one any more expensive or time-consuming than the others?
Foran: We have three channels of distribution, and each one does have a distinct marketing plan. Our strongest channel right now is clearly the RIA channel. There, our strategy is to listen closely to what our clients want so that we can help them grow their businesses. The plan there is that we're going to continue to listen and bring new and unique products and services to them. As a matter of fact we have several new products on the drawing board specifically suited for the registered investment adviser.
On the retail side, our primary strategy is based on a focused public relations effort. And lastly, the strategy in the broker/dealer channel is based on building a strong and dedicated sales force. Their job will be to go out and tell the Rydex story to the independent, regional and national broker/dealers. We're still relatively unknown in the broker/dealer world, and we think that we have a unique value proposition for them. And lastly we plan to introduce new funds that specifically appeal to the broker/dealer channel, the first one being a sector rotation fund, which is in a pre-subscription period ending [March 22].
MFMN: Do you know yet how many funds the firm is going to launch in total specifically for broker/dealers?
Foran: I do, but I'm not going to tell you.
MFMN: Is there a timeframe for which you want to get them out to the market?
Foran: We're still in the formulation process. We have several products that I think you'll see over the next 24 months.
MFMN: Is there a difference between breaking into the broker/dealer channel and networking relationships there versus building a network within the RIA channel? Is one more difficult than the other?
Foran: If you're asking whether it's easier to get traction in the independent broker/dealer channel versus the regional and national firms, the answer is yes. They tend to not get as much support from the larger fund companies, and when we go in and help and support them, I believe that they're very appreciative of it.
MFMN: What was the impetus for Rydex going after broker/dealer distribution last year? Clearly, you want to bring in assets, but was that specific point in time an advantageous time to do it?