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Home Office Desires Conflict With Those Of Advisors

by Deb

Lately the interests of home offices seem to be diverging from those of advisors. This is curious, in that they should have a shared end goal of selling more financial products and services. This discrepancy became increasingly apparent to me as a result of the findings of our new research, Evolving Distribution, as well as what I learned at our own National Accounts roundtable and the Morningstar conference. This gap has always existed to some degree, but seems to be widening (at least temporarily). It certainly makes marketing and sales strategies difficult for our asset management clients.

Home Office Priorities:

• Models - home office due diligence


• Removing redundant products (fewer asset managers)


• Passive approach

Advisor Desires:

• Advisor due diligence


• Adding asset managers and choice


• Active funds

We know that margins are down and that merging distributors will address the redundancy of both products and platforms in the coming months. Additionally, distributors are increasingly using models and UMA platforms to bolster profitability and strengthen their holds on client assets. Lastly, home offices seem to be focusing more on passive investing.

The advisor story is in sharp contrast. They claim they are ramping up their own due diligence, ditching the buy and hold strategy (did they ever really embrace it?) and moving towards active managers. Some advisors have increased the number of asset managers they use per asset class and are claiming diversification.

I am very much looking forward to gathering real intelligence on this "gap" from the results of our joint advisor survey with Horsesmouth, FA Vision. It will be enlightening to hear what 3,500 advisors have to say about their current practices, including investment decisions, product choices and favorite firms. Taken in conjunction with the information from our Evolving Distribution report, this will arm our asset management clients with comprehensive information about both home office and advisor desires as they embark on intelligent planning for 2010.