There's a disconnect between financial advisors and the asset managers they rely on for investment products.
That's according to recent Cerulli Associates surveys asking both advisors and asset managers what they most want to get out of working together. Of the more than 100 asset managers polled, 52% believe advisors want help bringing in new business and other sources of growth. Yet only 16% of advisors actually prioritize such assistance.
Brendan Clark, the CEO of the asset manager Clark Capital Management, said the results aren't surprising. Most advisors tend to view business development as something they do well on their own.
Instead, what they often want help with is client-facing tasks such as assembling custom-made portfolios, selling assets while minimizing taxes and providing reports and analyses of investment performance.
"Advisors want tools to use when they sit down with their clients and kind of enable that engagement," Clark said. "So when you think about that, it's a lot of point-of-sale support for them."
Where asset managers, advisors diverge on value of additional services
Asset managers like Clark Capital are often deemed "wholesalers" whose primary job is to help advisors' retail clients gain access to investment vehicles like mutual funds, exchange-traded funds (ETFs) and custom-built portfolios.
But Cerulli's report reveals that advisors expect much more, even if help with business growth isn't usually on the list.
When asked what practice management resources they most want from an asset management partner, advisors pointed to client engagement strategies (37%), financial planning support (29%) and behavioral finance coaching for clients (27%) as top priorities. Each survey taker could select three choices.
Asset managers' responses diverged from advisors' in several ways. Nearly half (48%), for instance, listed client engagement strategies as one of their most valuable offerings.
What advisors say they want
Individual advisors vary widely in what they expect from asset managers. Kashif Ahmed, the founder and president of American Private Wealth in Bedford, Massachusetts, said he'd be happy if asset managers stuck with simply providing access to investment opportunities. Although many asset firms say they provide additional services at little to no additional cost, Ahmed said it's impossible to believe the expenses don't eventually lead to higher fees.
Ahmed said he outright refuses to meet with wholesalers who pitch help with improving his firm's customer relationship management, or CRM, computer system.
"No, no, no, you're in the mutual fund business," he said. "What are you doing even calling me for this? You know, the fact that they have you out in the field doing this nonsense and paying you for this — that's getting added to the expense ratio."
Bryan Byrer, the founder of Millennial Financial Planning in Indianapolis, said he hasn't used many of the auxiliary services offered by the asset managers he works with. But he's glad they are available in case he should need them some day.
The primary asset manager he works with, Dimensional Fund Advisors, offers various additional services and products including surveys to help advisors see how they compare with others in the industry and one-page fact sheets on the behavioral psychology behind certain investing decisions.
"They also do portfolio analysis, and I did that actually shortly after I built my first portfolios," Byrer said. "I walked through it with them. That definitely helped me to feel a lot more sure about how I constructed the portfolio."
How asset managers get ideas for additional services
Clark said Clark Capital routinely presents "Live from Philly" webinars on topics like estate planning, business succession and taxes. A talk held last summer generated so much interest that the speakers couldn't keep up with all the questions coming in during an ensuing Q&A session.
So the estate and tax attorneys on Clark Capital's advanced wealth planning teams filmed more than two hours of video providing answers, broke the footage into small segments dealing with specific topics and sent those out to advisors. They also used the initial questions to develop study guides, handouts and presentations advisors could attend to obtain continuing education credit.
Clark said webinar and other service ideas often come from the firm's regular meetings with advisors. One recurring request is succession planning for baby boomer business owners nearing retirement.
"They could be looking to liquidate that business, and they need help with that," Clark said. "The normal advisors out there don't have that capability. So we built this advanced wealth planning team, which is a team of estate planning attorneys, to engage with the client's local tax and estate planning attorneys and help guide them through that kind of event."
