In the turnkey asset management platform space it inhabits, Eqis Capital deemed Curian Capital a respected rival for advisors and assets.
When it was suddenly announced that Curian would be shuttered by early next year, Eqis was among the firms seeking a position to benefit from its demise, recognizing an opportunity to ramp up its growth plans, asset base and workforce.
"Do we see this as opportunity to grow? Yes, it would be disingenuous to say that we didn't," says Mark Leonard, its senior vice president of marketing. "But we also know that this opportunity carries a lot of responsibility and we feel great empathy for those financial advisors displaced by Curian's closure."
Owned by U.K.-based Prudential and a subsidiary of Jackson National Life Insurance, Curian announced at the end of July that it would stop accepting new accounts and expected to exit the business around the end of March, Bloomberg reports.
The Denver-based TAMP had $12 in AUM last year, according to Prudential, but also experienced $27.9 billion in losses. The firm reported a workforce of 304 employees.
Its winding down period will "allow financial professionals and clients sufficient time to plan for the transition of accounts," said Curian's interim president, Mark Mandich, in a statement.
"When Curian launched 12 years ago, the competitive landscape and market trends favorably supported the business," Mandich said.
"Given the industry-wide changes in technology, product offerings and market size, Curian has determined that it is no longer commercially positioned to provide clients high value investment programs over the long term. This was a difficult decision."
The firm added in a note to Bloomberg that it would be "providing monetary, job-placement and counseling support to our associates during this transition."
Leonard says the announcement came as a complete shock to his firm as well. "We think it's unprecedented," he says. "We've never heard of such a thing happening like this before."
SWIFT REACTION
The reaction to Curian's announcement was swift, Leonard adds.
"Our phones started ringing off the hook. We've hardly had the chance to take a breath since then.
"We have talked to financial advisors with assets on the Curian platform. Everybody's scared. We've been in talks with self-identified Curian orphans."
With that in mind, Leonard says the first task that Eqis management focused on was being a voice of assurance to those suddenly out in the cold.
"We felt this was a jolt, but for those advisors who have money on the Curian platform, we feel it's traumatic. It's a nightmare experience."
The news then set in motion future planning efforts at Eqis, he adds, that would in some ways mirror the disruption being felt at its competitor.
SMALLER END
Based in San Rafael, Calif., Eqis is a TAMP on the smaller end of the market, with $1.25 billion in AUM, according to Joel Bennett, the firm's vice president of business strategy.
"We're not a big player in the market, but we've been doubling every year over the last three years," Leonard says.
The firm has less than 10 mutual funds on its platform, opting to focus on ETFs and separately managed accounts. Bennett adds that Eqis offers 20 ETF sleeves covering various strategies, and bolstered its 401(k) program.
The majority of its client base are indepdent financial advisors. Eqis is proud that it can offer seperately managed accounts for a minimum of $25,000, and claims it is the only TAMP that offers fractional shares in separately managed accounts.
"What we're focused on is giving the average American investor the ability that ultra high-net-worth individuals have had for decades," Leonard says.
SCALE UP?
But the impending closure of Curian suddenly brought his firm's ambitions into view. Could it capitalize and potentially scale up its growth ahead of what it had originally anticipated?
"In an acquisition event you have time to plan," Leonard says. "This was very abrupt. We immediately began evaluating the infrastructure we have from top to bottom, from our technology to our people.
"All of us realize there are going to be a lot of challenges in the months ahead. Curian will remain open until March 2016, so there is some runway to bring assets over."
One of the concerns the firm has in absorbing advisors onto its platform is to preserve its level of customer service, Leonard adds.
Curian advisors with assets on their platform will be the easiest to process, he says, adding there are 2,000 advisors with soliciting agreements that suddenly need a home. He did not say how many were in discussion with Eqis.
"We will welcome Curian advisors, but I anticipate we will ask them to be patient while we bring them on at pace that we can absorb."
The firm is already rethinking its growth targets, Leonard says.
"Our financial team is taking a hard look right now," he says. "It's a game changer that will take a little time, but its urgent that we get top of it the best we can with the information we have. This will preoccupy the executive team over the next six months."
Eqis's offerings could change too as a result of Curian's closure. "We're confident in our present set of offerings, but modifying that because of this event is probably an idea we can consider. But we will focus on how can we deliver what we already have."
OTHERS TOO
Of course, Eqis isn't alone in pursuing the advisors and client assets being left behind in Curian's closure.
One of the larger TAMPs, Brinker Capital, which manages over $18 billion, quickly announced it had hired former Curian national sales manager Greg Verfaillie as its new managing director.
Leonard says that Eqis was in talks with former Curian employees as well. "We're here to serve both advisors and through them, investors."
