First the seminar, then the pitch. The formula is probably as familiar to investment professionals as tea before haggling is to customers in a Turkish bazaar. But a few years ago, Nuveen Investments decided it didn't want to sell their managed accounts like oriental carpets anymore.
"When I was sitting on the other side of the table, we were always approached by firms wholesaling and basically telling us, Let us tell you about practice management. Let us tell you about the industry, and oh by the way, we have this great product in the value space,'" recalls Frank Maiorano, the managing director at Nuveen responsible for developing relationships with registered investment advisers.
Intuitively, he says, he always thought that was the right way to do it. But when he joined Nuveen Investments, Maiorano was surprised to discover that it wasn't actually the way advisers liked to be sold. He says he learned this after asking a number of top advisers he knew about the best way to market Nuveen's funds and hearing that they wanted a sales process that emphasized the product first, and kept the education as a separate thing.
Now, he says, his people first find out what their client needs. In addition to its mutual funds and exchange traded funds, the $80 billion division of the St. Paul Cos. manages three distinct separate accounts families: Rittenhouse Asset Management, which tracks large-cap growth, NWQ Investment Management, which focuses on value, and Nuveen Asset Management, known as a municipal bond shop.
Advisers like this consultative approach much better, he says. "People were very appreciative that I didn't spend three weeks getting to know them and telling them things that were incidental to what we were really all about," he says.
In spite of this more direct approach, however, Nuveen clients are still getting their tea as well as the rug. Only these days, the seminars are being delivered by a dedicated advisory group, Nuveen's wealth management services group, which the sales team refers the adviser to once the relationship is up and running.
Executives in the Chicago-based firm say the approach is working very well. John Nersesian, director of Nuveen's wealth management services group, says that he and the other seven advisers in his group provided some kind of training or consultation or information to more than 5,000 financial advisers last year. Nersesian says that the approach seems to be working well. "It's productive for the investor, it's helpful to the adviser, and it ultimately pays dividends to our firm," he says
Part of the reason for the reception the group has received, he says, is that it's coincided with a decline in the amount of training and support many firms give their advisers. "In many ways, it created a great vacuum or opportunity for us to step in and to offer something that was in very much high demand," he says.
Nuveen also tried to profit from advisers' experience in the way it designed its educational materials. Nersesian, an 18-year Merrill Lynch vet, says he had seen many seminars that weren't much more than disguised advertisements, rather than truly educational. Nersesian decided to provide something more sophisticated and change the tone of the materials, too.
"There are a lot of firms like ours that try to help financial advisers by telling them what to do. [But] you need to become more comprehensive. You need to build a fee-based practice. You need to become more consultative. Where we're different, we hope, is we don't tell advisers what to do. We teach them how to do it," he says.
The group presents a variety of training materials on subjects that run the gamut of adviser concerns, from client discovery to alternative investments. The material is made available to clients through seminars, consultations, Web-based seminars and conference calls. Nersesian says that he and his staff are sometimes even available for calls with clients when a particularly complex issue comes up.
On the issue of separately managed accounts, Nersesian seems to see part of the educational challenge as overcoming some misconceptions about what SMAs are. "I think they were maybe incorrectly sold or marketed to the financial adviser as an easier way to do business," he says. "You no longer have to pick stocks for your clients. You can outsource this, leverage your tim, and derive a better benefit for the investor and yourself. I'm not necessarily convinced that that's an appropriate description of a consulting-based model." In fact, he says, serving clients with SMAs is also hard work, involving selecting managers, constructing portfolios, reviewing results and sharing them in a meaningful way with the client. This takes a lot of time, energy and talent. "If you're looking at SMAs as an easy way out, you're using the tool incorrectly," he says.
Terry Riordan, a senior vice president of Northern Trust in Chicago and director of sales and marketing for its wealth management group, says his group has found Nuveen's seminars very helpful. "Sometimes you have people who come in and provide technical training or sales training and, frankly, they haven't had any real life experience in many years," he says. Nersesian and another of his colleagues who trained his group weren't like that, he says. They were both experienced brokers, who were able to share their experiences along with the other training material.
Merrill Lynch likes the Nuveen way as well. Says Ian McDade, a vice president and international wealth management adviser at Merrill Lynch in New York, "A lot of the money management firms may trot out an economist or maybe a portfolio manage, and that's their idea of helping you grow your business. Nuveen has picked kind of a unique path."
Bennett Voyles is a contributor to SMA Adviser, an e-newsletter of Financial Planning.
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