Curian Capital, a Denver-based registered investment adviser that supplies fee-based managed accounts, says it is using a broker training program to make headway in the bank distribution channel.
The three-year-old company said last week that it had exceeded $2 billion of assets under management, a $500 million increase since its push in the bank channel was reported in December.
This latest growth took place since Michael Bell took the reins of the company, succeeding Clifford Jack, an executive vice president and the chief distribution officer of Jackson National Life Insurance Co., Curian's parent.
Mr. Bell, Curian's president and chief executive officer, said he could not know what portion of the recent growth came through bank sales because his company's products are distributed through third-party broker-dealers in multiple channels.
But Lynn Niedermeier, the president and CEO of Invest Financial Corp., a Tampa third-party broker-dealer, said her company's sales through banks of Curian's managed accounts, have amassed $68 million of assets. Invest has about $400 million of separately managed account assets from 40 managers, she said.
Both Curian and Invest are units of Jackson National, the Lansing, Mich., subsidiary of London's Prudential PLC.
Curian says it has been able to gain traction in banks by training brokers - who ordinarily charge commissions for individual transactions - in how to move to a fee-based advisory approach. In this model, brokers' fees are based on a customer's assets under management.
Invest offers other companies' managed accounts, Ms. Niedermeier said, but Curian is the only one that provides training. And this training has helped reps boost sales of a range of products, not just Curian's, she said.
"They find they are increasing their compensation because they are marketing to a different kind of client that they had been missing before," she said.
A key selling point for Curian's managed accounts is that their investment portfolios use multiple managers. And the investment minimum of $25,000 is a fraction of the industry norm for separately managed accounts.
Traditionally, such products have required minimums of at least $150,000. This, along with their fee-based compensation structure, meant that they were usually sold through banks' trust departments. Curian's accounts, on the other hand, are usually sold through their retail units, Mr. Bell said.
"Most of my clients are just everyday investors," said Darryl Presley, a senior vice president who heads the retail brokerage area at First Bank, a $1.3 billion-asset, privately held institution in Lexington, Tenn.
These customers' net worth ranges from $100,000 to $300,000, he said. Mr. Presley's customers have about one-quarter of their $20 million of separately managed account balances in Curian's product.
Because the bank is squarely in the Bible Belt, one of the Curian accounts' selling points is their ability to screen out potentially objectionable investments like alcohol or gambling stocks, he said.
Invest Financial sells through 140 banks, whose average size is about $1 billion of deposits, said Ms. Niedermeier. Mr. Bell said his company is focusing on smaller institutions in order to build a beachhead for the idea of selling separate accounts outside of trust departments. He said he would like to target larger banks eventually, though.
"When the company becomes a mainstream name," Ms. Niedermeier said, "I think a lot of the big banks will find it appealing."
The managed account industry is growing rapidly, in part due to falling account minimums, as well as the product's tax benefits and its ability to be customized.
Mindful of the baby boomers' wealth, banks, brokerages, and trust companies have been targeting mass-affluent investors for several years. Technology has helped make the shift in emphasis possible by enabling investment advisers to handle more accounts than in the past.
Managed account assets stood at $736.4 billion industrywide at March 31, up nearly 9% from the previous quarter and 25% from a year earlier, according to Financial Research Corp. in Boston.
Curian's asset total puts it in the top 10 among third-party vendors of managed accounts, according to Boston-based Cerulli Associates.
