Author: Anu Heda

Private Label ETFs

Posted by Anu Heda on Nov 04, 2011, in Thoughts , tagged with

Earlier this week, I read more about private-label ETFs in Registered Rep. What are the primary attractions for independent advisors to present investors with customized ETFs? After all, there are more than 1,100 ETFs available (as of January) and perhaps as many as 1,400.

Here are three ways I can see how advisors may benefit from customized ETFs.

  1. Simpler investment vehicle – As mentioned in the article, separate accounts may be difficult for certain investors – either due to paperwork or account minimums.  ETFs require less (none?) paperwork and very low minimums.
  2. Elevated Profile – ETFs have an elevated profile via successful marketing from Vanguard, BlackRock, and State Street. Investors know of them (more so than separate accounts).  If an investor is trying to get comfortable with his FA, then an ETF is a simple starting vehicle.
  3. Public Track Record – For an FA building a brand on investment prowess, the ETF is a straightforward way to publicize performance.  If an advisor has 50 clients, with 50 separate accounts, then he can’t really discuss performance in any meaningful.  An ETF will show performance publicly.

I disagree strongly with one reason for launching customized ETFs.  The article quotes a few advisors as they discuss reaching new clientele.  That seems improbable.  An investor seeking out new investment vehicles will probably be dubious (to downright dismissive) of new ETFs from advisor firms, considering the thousand-plus options already available.

What do you think?  Send us a message here.

Success Lessons from an RIA

Posted by Anu Heda on Nov 04, 2011, in Thoughts , tagged with

I met with the founder of a successful RIA practice last week.  His business is over 20 years old with about 1% client attrition (stunningly good to me).  As we spoke about how his business arrived here today and what may help grow the practice, he had three reasons for his continued success.

  1. Start small and prove performance – He mentioned that he’d often start with small slices of investable assets; something like $10,000.  And over time, he’d ask if the client was happy with his firm’s performance and similarly content with performance of her other assets.  Often she’d say yes about his firm and no about other firms.  Then she’d move additional assets to his firm.
  2. Out-service the competition – He believes that most of his competition spends too little time with clients.  He goes to great lengths to visit each client quarterly.
  3. Knowledge versus expertise – He built his firm to be knowledgeable about broad market situations and events, and to have extremely specific expertise in one investment strategy.

It’s always great to re-learn those lessons.  They apply pretty closely to product manufacturers as well.

Learning About Recordkeepers Online

Posted by Anu Heda on Nov 02, 2011, in Thoughts , tagged with , , , , ,

In the previous post, we examined the experience of searching for a recordkeeper. In this post, we’ll consider another common experience – the referral. Many people will look for a referral from anyone they deem qualified to provide a starting point.  With a referral mindset, I asked a few DCIO wholesalers to recommend recordkeepers for small and new plans.  I heard three firms repeatedly (and reasons why):

  1. Ascensus – Low-cost, open architecture
  2. Principal – Big, hands-on, and helpful sales force
  3. John Hancock – Good, easy-to-use technology

From reviewing the firms’ Web sites, online marketing has not been a major focus to-date.  None of the top firms’ sites provides a comprehensive pre-sale experience.

 … [read more]

Searching for a Recordkeeper

Posted by Anu Heda on Nov 02, 2011, in Thoughts , tagged with , , , ,

The 401(k) market is massive. There’s nearly $3 trillion dollars in 401(k) plans. For white-collar America, it’s simply part of the on-boarding process at a new job. And those recordkeepers that sell primarily small plans, I think there’s an opportunity to increase sales from optimizing parts of the Web site.  By “optimizing,” I mean improving sales leads in two ways:

  1. Through search engine results
  2. By providing quick visibility into recordkeepers’ value proposition

 … [read more]