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Asset managers aim to meet demand for 'unique services'

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Asset managers are under pressure to maximize distribution efforts as competition ramps up, regulations tighten and tech innovations become increasingly important to firms.

Money Management Executive reached out to industry executives to get their take on these trends.

"RIAs, IBDs and wirehouses demand unique services from the asset management firms with which they work," says Kevin Quigg, chief strategist at Exponential ETFs. "Providers must create awareness with retail investors and institutions alike, as both are increasingly utilizing ETFs."


Kevin DiSano, head of ETF sales at Nuveen, notes that the tightening competition to attract advisors means managers must be able to differentiate themselves and their products from the rest.

"Long gone are the days of launching various simple beta strategies and watching the assets flow in with very little marketing or distribution behind them," DiSano says.

For more on what Quigg, DiSano and four other executives foresee across asset management distribution channels, read the rest of our special report.

Chiron Investment Management Head of Distribution Kirsten Pickens: Big data builds growth map
The distribution landscape in investment management has changed tremendously over the last decade, and whether you are a scale player offering many choices, or a boutique player like us, you must be more targeted and focused with your time and resources.

It's difficult not to use all the data that exists today. At Chiron Investment Management, we had the opportunity to start with a blank canvas, looking at distribution trends and their potential effectiveness with fresh eyes. We work with several firms and utilize third-party vendors to obtain the data we need to define our opportunities and align ourselves with clients and prospects.

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As a boutique investment manager with a distribution team of 10, incorporating and streamlining the critical data available to us has been central to optimizing our sales strategies. One of the challenges of customized data is deciding the best use of delivery mechanisms. We continuously try to optimize every interaction and opportunity with our financial advisors, but it's no secret that getting advisors on the phone or to respond to e-mail is more challenging than ever.

With advisors being bombarded by more asset managers, the delivery of effective, relevant and customized information is imperative. As we look ahead for 2019, a digital strategy will be more front and center.

Exponential ETFs Chief Strategist Kevin Quigg: Meet marketplace demands
Attracting client and prospect attention, along with assets, can be a tough proposition these days.

The scope of wealth management professionals who manage meaningful pools of client assets has widened greatly over the past 20 years. RIAs, IBDs and wirehouses demand unique services from the asset management firms with which they work.

ETF providers must create awareness with retail investors and institutions alike, as both are increasingly utilizing ETFs as their investment vehicle of choice. At Exponential ETFs, our distribution strategy is centered on the customer experience. Specifically, there are two key areas on which we focus:

  1. Embrace technology. Wealth managers want to consume information on their schedule and in their format. At Exponential ETFs, we release a podcast every week, deliver webinars that can be accessed on-demand through our website and post short, educational videos online in addition to featuring traditional written material. The aim is to make our information available to advisors in multiple formats.
  2. Solve a problem and be unique. When we engage with advisors, we are either adding to their productivity or taking away precious time. The content or viewpoint we provide to advisors needs to reflect this.

The market is saturated with investment commentaries, so we provide analysis on and potential solutions for advisors who may be having challenges with their specific portfolios, or with client communications. This allows us to tailor different solutions to different client types. As various areas of distribution have become commoditized or less effective, an emphasis on technology combined with focused, problem-solving content has allowed our firm to manage the increasing demands of our varied client base.

Nuveen Senior Managing Director Kevin DiSano: Stand out in a crowded field
One of the key challenges facing firms looking to expand ETF distribution is the ability to differentiate their offerings as the space become increasingly crowded.

Long gone are the days of launching various simple beta strategies and watching the assets flow in with very little marketing or distribution behind them.

At Nuveen, ETF distribution efforts are focused on leveraging our core strengths and relationships. Advisors are increasingly reluctant to work with asset management firms that don't have a demonstrated area of expertise. Most of the successful firms that have entered the ETF space in the past five years have done so by playing to their strengths in a unique way.

One example to cite at Nuveen is our ESG suite. Our firm has been involved in ESG investing for over five decades, and it is a core area of expertise.

As we discuss this with advisors, there are several items we can focus on to differentiate our suite from the rest of the marketplace. Helping advisors understand how our ESG solutions solve for common concerns among investors in the ESG space, and how best to articulate this to investors, is a key focus for our team of ETF specialists.

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We use various strategies, such as continuing education programs designed to help advisors expand their knowledge base around hot topics including ESG and fixed-income investing, and we produce various educational primers and white papers for both advisor and investor use.

We also focus our efforts on the larger Nuveen distribution team that is interacting with advisors in smaller territories, and specific channels to help identify advisors that are more likely to allocate to our ETF suite.

Prio Wealth Managing Director Kelly Morgan: Ways to align priorities
When clients ask their advisor, "what can I spend in retirement?", the quick and easy answer may seem to be the 4% rule, but that response is a disservice to clients. The right answer is, "it depends on what's important to you."

The "4% rule" assumes that spending 4% of investable assets during retirement (adjusted for inflation) enables the portfolio to "survive" for 30 years with a high degree of success. Although intended to serve as a barometer for spending, the rule neglects other critical considerations that dictate what our industry calls a "portfolio's survival rate." It uses standard assumptions for asset allocation, tax considerations, diversification, and relies on consistent annual spending when we know retirement is multi-phased.

In summary, the rule applies a linear solution to something that is clearly not a linear problem. Instead, advisers should utilize a strategy that personalizes retirement advice.

  1. Clarifying client priorities. In helping clients clarify their retirement priorities, advisers can better allocate spending dollars and recommend an approach that allows clients to accomplish those priorities prudently.
  2. Sorting expenses. Identifying client needs, wants and wishes and then allocating spending in that order prioritizes spending tradeoffs, from the lowest priority, when necessary.
  3. Using sophisticated planning software. Planning software allows advisers to demonstrate their depth of analysis and take into account income sources, assets, taxes, allocation and multiple time horizons.

Overly simple rules of thumb can be dangerous - leading to over-confidence or, as we see quite often, excessive fear and constraint has retirees worrying rather than enjoying retirement.

Success is defined as a disciplined process that continually engages clients and makes adjustments to reflect life's inevitable shifts. In life, retirement success is about far more than "portfolio survival rate."

The best advisors measure their worth by how they empower their clients to thrive in retirement by aligning their priorities with their resources for a life well lived.

Symmetry Partners Investment Product Strategy Director Casey Dylan: Help your clients thrive
Advisors are increasingly selecting asset managers whose distribution strategies reflect a commitment to helping them survive and thrive, as noted in a 2015 report from Cerulli.
It's clear that client attitudes, technology, staffing requirements, business economics and regulation are challenging advisors to conceive of business models that will be competitive, profitable and sustainable for the long term.

Here are several key observations that should be informing the strategies and tools asset managers are crafting:

  • The industry is experiencing fee and margin compression.
  • The costs of compliance and regulation are growing.
  • Organic growth is challenging.
  • Technological advances are a source of both opportunity and dislocation.
  • Age and economics are driving owners of advisory firms to make difficult choices.

With these observations in mind, potential areas in which asset managers can build highly valued resources include:

  • Strategies to accelerate organic growth by increasing the number of "right" clients.
  • Offering new products or services that can help advisors create multiple revenue streams.
  • Developing tools to help advisors maximize effectiveness, track and benchmark critical business functions and leverage technology.

Growing competition from virtually all other sectors of the financial industry requires that asset managers find a compelling method of separating themselves from the rest. Taking the time to thoughtfully craft high-impact tools and services is a step in the right direction.

GraniteShares Marketing Director Brian Guerra: Create customer awareness
As a young, fast-growing ETF company, we find that some of our biggest sales and distribution hurdles involve customer awareness.

The simple fact is that not all of our potential customers are aware we exist. Once we are able to clearly explain who we are and tell our story, the distribution process becomes far easier.

A major challenge is ensuring that the proper message is delivered to the proper audience. Some of this is a byproduct of marketing, but when it comes to building relationships, gaining trust and educating a potential investor, a key focus for GraniteShares is growing out our distribution team.

We are also investing in automation and leaning heavily on various technology platforms to make the sales and distribution process as efficient as possible. This is incredibly important with a small sales team, as there are only so many hours in a day, but it will be just as crucial as the distribution team grows.

Another challenge facing ETF issuers and asset managers at large is misinformation. For example, a question we hear often among the advisor community is about the liquidity of ETFs.

If an advisor looks at the AUM of a specific ETF, they may naturally have liquidity concerns or believe they will be unable to get out of the position if needed. But this isn't the case, as ETF liquidity is generally tied to the liquidity of its underlying securities. This kind of question has prompted us to focus more on advisor education.

We are ramping up a more robust webinar program, and we're building out a library of educational content that advisors can reference.

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