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Brokers Rate MFS, AIM, WM Group Tops


When it comes to mutual funds, for brokers, the bigger the better.

Boston consulting firm Dalbar's study of marketing and operations managers found that larger firms are in a league of their own when it comes to supporting broker/dealers.

From surveying 153 B/Ds, Dalbar found that the heavy hitters showed overall ratings far superior to those of mid-sized firms, out-muscling their smaller counterparts.

Jenifer Stromfors, research coordinator at Dalbar, said the reason larger firms excelled in the study was simply that the economies of scale allow large firms to get out to the B/Ds more often and contact them more frequently.

Four of the largest mutual fund companies earned the label "very good," the study's second-best designation for overall operations support. This level was out of reach to the mid-sized firms. The same goes for the insurance world, as two of the largest annuity firms were able to get on the "very good" list, but the smaller annuity providers could not.

American Funds, which seemed to be popular in the minds of main office operations managers in various categories, fell significantly in the eyes of marketing managers in terms of overall marketing support when compared to last year's study, Dalbar said. The firm dropped from third to seventh place in that category, and suffered the most when it came to understanding the broker/dealer's business and wholesaling support.

In the overall marketing category, American Funds achieved a score of 3.1 out of a possible 4.0 and a "good" designation, with 40% of the respondents saying the firm's support is "excellent."

The leader in this category was MFS, which grabbed a 3.35 score, finishing slightly ahead of AIM, which checked in with a 3.33. The survey was conducted in July and August.

Main office operations managers found that American Funds was the most willing to make recommendations and, thus, gave the firm a score of 3.72. More than 70% of the respondents labeled American Funds as "very good" when it comes to making suggestions. MFS and OppenheimerFunds came in second and third, respectively. Main office marketing managers had the same trio at the top of their list, but MFS was the leader.

"In the last three years, mutual fund companies have changed their marketing support, and American Funds have stayed the same," said Stromfors, explaining why the firm slid in the overall marketing category. The firm has "stayed the course" and kept with their marketing materials, as others have shifted based on the direction of the market, she said.

WM Group made the most waves in the mid-sized category, canon-balling to the No. 1 slot, all the way up from 22nd last year.

While The Hartford was a dominant player in a number of the categories, including ease of doing business, understanding broker/dealer firms' business, problem resolution, and in-person wholesaler support, WM Group walked away with the overall marketing support top honor thanks to main office marketing managers.

Troubled Waters

Dalbar suggested the fund firms have their work cut out for them in the next year since the recent regulatory probe into mutual fund trading practices could lead to significant changes in the way the two groups conduct business with each other.

"The relationship between the broker/dealer and mutual fund company is really going be stressed, so it will be interesting to see what fund companies rise to the occasion," Stromfors said. The 4 p.m. deadline for fund firms to receive orders from intermediaries, as proposed by the Investment Company Institute and the Securities and Exchange Commission (see story, page 1) may be a source of significant tension in relationships between intermediaries and fund firms, she said.

"On the marketing side, the biggest issue in the last year was performance," she said. "Going forward, mutual fund companies are going to have to deal with the disclosure of compensation."

And that could be very tricky.

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