Emboldening Financial Advisors
May 11, 2012
There are a growing number of advisor-focused "value-added programs" that fund firms are using to lure top producing and other advisors to sell their wares to investors.
But which programs really help advisors build their businesses and, at the same time, add to the asset management shop's bottom line?
What's In A Name?
Industry insiders point out that these programs come in a variety of forms and are called different names. But all have one common denominator: They're essential to the health of a fund firm's business.
According to Scott West, managing director of Marketing Programs for Invesco Distributors, Inc., it's a very expensive proposition to have a so-called "practice management group" that serves advisors on a full-time basis.
"We have seven full-time people and there's a lot of overhead, and I'm reminded of that all the time," he told an audience of advisors and asset managers at the recent Money Management Institute 2012 Annual Convention held in Chicago.
Invesco Distributors has 27 different programs as part of its consulting group and a slew of those programs are available for a majority of financial advisors. Later this year, West is slated to give a presentation to a group of advisors at the Financial Planning Association Symposium in Minneapolis on words to use and lose with current investors. Good ones are "dream retirement" and "financial freedom" while words such as "outliving your money" and "inflation risk" are death knells for advisors. The program is based on research done by Maslansky, luntz + partners.
Michael Bitterly, global head of BlackRock Wealth Management, who has been on the receiving end of value-add programs and also a value-add content provider, said it's really about client acquisition and maintenance. "It doesn't get any better than sitting down with your client and saying, 'What do you want?' and 'What are you trying to do?'" he said. "I've been on the other side of the table where someone is pitching me their idea and I am patiently waiting to tell them exactly what I want."
Joseph Rizzo, head of advanced financial advisor development at Morgan Stanley Smith Barney, said a lot of value-add programs focus on communicating advisors' own value-add to their clients. "They have trouble communicating their value, investment philosophy," he said. "We have to look at it as what's out there that's unique and a really powerful offering?"
As an example of value-add, Morgan Stanley recently revamped its investment conference for top advisors this year to include, among other things, iPads so that advisors could forward to their email notes that they took or presentations they want to revisit.
Marlene DeLuca heads up J.P. Morgan Asset Management's Insights Group, which labels its advisor program "Insights." Her firm offers advisors a Guide to the Markets curriculum, a 65-page PDF looking at a variety of charts of equities, economic data, fixed income and other market data. "Our guide to the market book, we use it as both a prospecting and client tool," she said.
"We'll give access to advisors for about a year with the hope of gaining access and earning their trust. After that point in time, it is something that we'll pull back on. For existing clients, we have even more robust offerings such as collateral pieces that provide insight and perspective on what's going on in the market. We're thinking in terms of how we align with the home office and then we're thinking about what it's like to sit in that advisor's seat."
Struggling to Add Value
West admitted that one of the bigger challenges facing fund firms is creating content for advisors that will ultimately result in sales for those firms.
"We've had a lot of starts and stops in terms of figuring out what the right recipe is for offering these programs to advisors. I've worked for 11 different CEOs in 29 years and many of them say, 'How do you track this? It's a little like advertisement because sometimes it is difficult to track," he said.
West also offered that his firm has also struggled when it comes to getting its wholesalers on the same page with its advisor clients. "We've gone from mandatory training for wholesalers to produce follow up modules that have not gone well because we have some that see this as a valuable tool while others don't," he said.
Whatever monikers firms adopt for their programs, they all need to do one thing right, according to Rizzo. "If you can build (advisors') confidence, that's the biggest thing you can do, especially now because it is really tough for them to have a compelling investment philosophy. We have a lot of scared clients out there and a lot of scared FAs,'' he said, because of the uncertain market environment.