segmentation

Advisors investing in prop products – strange sounding…

Posted by Anu Heda on Apr 24, 2011, in Thoughts , tagged with ,

Registered Rep chronicled the story of a few Independent Advisors & RIAs starting their own investment vehicles.  A primary selling point is transparency – if the advisor manages the vehicle, he/she can share daily transactions and holdings.

So many asset managers; so many investment vehicles; so many investment strategies – these advisors could not find any investment product that provides the transparency and the strategy they seek?  Naturally, I was a little skeptical.  The virtues of open architecture are well-documented and many providers invest heavily to reinforce those benefits.  So why bother?

Maybe there’s a different play though.  I can think of two investor types that may prefer this:

  • Nervous Nellies – They want to spend their evenings fretting over holdings, performance, and other data points.  For that reason, they like trading in specific equities and even mutual funds.  They may have bought into the concept of alternative investment strategies, but can’t reconcile the opaque nature of hedge funds.
  • Bragging Bills – They want exclusivity at the cocktail party.  An adviser who provides these clients access to some fund without easy access can boast about it.  It’s sort of hedge fund “lite.”  (And this may improve prospecting for the FA.)

Is the advisor unable to find a product or is there value in having a proprietary product in the bullpen?

New Advisors Can Matter a Lot

Posted by Mike McLaughlin on Oct 14, 2010, in Thoughts , tagged with , , ,

Yesterday I had a conversation with a wirehouse advisor, Advisor X.  On the surface, he’s not someone an asset manager would focus on.  He’s:

  • New, with just one year of experience under his belt
  • Managing a book of business in line with his experience

If you asked most firms, Advisor X would not be someone to prioritize.  And yet, he profiles as a good target.  Why?  There are several reasons, but the most important is his affiliation with one of the biggest-producing teams in one of the biggest-producing branches in the country.  He’s closer to top producers than most every wholesaler who comes to the office.

Week after week Advisor X sits in on wholesaler presentations alongside numerous other less-tenured advisors and others looking for a free lunch.  And he blends in.  Wholesaler after wholesaler fails to recognize that he is a potential gateway to the most attractive advisors in the office.

This situation represents a challenge for sales teams.  On a broad scale it requires:

  • Improved understanding of team dynamics among advisors
  • Effective segmentation and profiling of advisors
  • Extensive coaching of wholesalers to enable recognition of these opportunities

More tactically, however, it requires wholesalers to take simple actions and improve the way they decipher branch dynamics.  Identifying Advisor X can be done by:

  • Grabbing 5 minutes of a branch manager’s time to discuss newer staff
  • Using existing advisor relationships to get insight on potential up-and-comers

Established advisors know very quickly who will and won’t succeed.  They know Advisor X.  And since most firms know and target the same advisors, an investment in digging a level deeper can unearth opportunities other firms miss.