Steve Lundquist took over distribution of J.P. Morgan Funds' products to registered investment advisers in June 2008, not long before the height of the financial crisis.
Yet sales through registered investment advisers have increased more than 70% during his tenure, something Lundquist credits in large part to the increased guidance the JPMorgan Chase & Co. unit has provided advisers throughout the crisis.
For instance, in the last four months of 2008, J.P. Morgan Funds made its conference calls with advisers — which feature experts sharing market insights — weekly rather than monthly events, he said.
"The monthly calls weren't enough," Lundquist said. "Things were changing so rapidly."
This year, J.P. Morgan Funds expanded from three investment forums annually to five. And it has broadened its focus from alternative investments to include conventional equities and fixed-income categories, said Lundquist, the managing director of J.P. Morgan Funds. "Coming through the last part of last year, the appetite for some of the less-liquid investment options has deteriorated," he said.
The unit also has expanded to 12 sales representatives from nine — all dedicated to the RIA channel — under Lundquist. And the growth of the RIA business has provided a tailwind to many asset managers, he said.
The number of registered investment advisory firms is multiplying as brokers leave wire houses. The category's growth is attractive to asset management firms, but it is a tricky distribution channel, said Alois Pirker, a senior analyst at the research firm Aite Group.
"Clearly it's a more difficult model to sell to, because you don't have those large, 12,000-member sales force kind of firms," he said. "With RIAs, it's firm by firm, and they tend to have three people or five people each."
Lundquist said that each member of J.P. Morgan Funds' sales team is required to hold a designation as either a certified financial analyst or a chartered management accountant.
They are backed by more than 20 client portfolio managers, professionals who understand the investment moves J.P. Morgan's portfolio managers are making. Through them, financial advisers get "feedback on our products," he said.
Lundquist had been a national sales manager for J.P. Morgan Funds' wire house division before George Gatch, the president and chief executive of J.P. Morgan Funds, promoted him to the newly created post. In an interview last year, Gatch said the company's RIA business had grown to the point where it needed a full-time leader.
The company's approach to the registered investment advisory market has been to target firms with at least $100 million of assets under management.
It focuses on the top 1,200 registered investment advisers in the country, based on their assets under management and their willingness to use packaged products, including mutual funds and separately managed accounts, Lundquist said.
J.P. Morgan Funds has developed relationships with 50% of such firms, up from 40% in spring 2008, he said. The registered investment advisers that partner with J.P. Morgan Funds average about $350 million of client assets under management, he said.
Its product set includes funds and strategies that can invest long and short. One of them, the Strategic Income Opportunities Fund, launched in October of last year, has surpassed $1 billion of assets under management.
J.P. Morgan Funds has $472 billion of assets in its short- and long-term funds. Its $46.6 million in net inflows from January through August ranked it fourth in the industry, according to Lipper, a unit of Thomson Reuters.
Including separately managed accounts and subadvisory relationships, J.P. Morgan Funds has about $525 billion of assets under management, Lundquist said.
For the past 20 months or so, flows into bonds have exceeded those into equity funds, Lundquist said, but he expects a pickup in equity investing in the next 12 to 18 months.
"We've got to be able to capture the growth in assets on the equity side of the equation as well," he said.
The plan is to launch "a number of new products in the near future," Lundquist said. Those products are expected to largely target the equity and alternative asset classes, he said.
