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Registered investment advisors meet with a variety of professionals from fund companies, asset managers and the like. That’s just a normal part of the business.
On the surface, advisors meeting with reps and wholesalers isn’t particularly noteworthy, but upon further examination, these previously benign encounters are taking interest turns. Just as clients are growing more sophisticated, advisors are responding and they’re demanding more interactions with specialists that can help them bring focused, tailored solutions to clients.
Take the case of alternative investments. “Alts” are increasingly coveted by clients, particularly those in the high-net-worth crowd and younger demographics. As a result, advisors are demanding more interaction with alts specialists.
The same goes for ETF specialists and that’s definitely a call asset managers and fund issuers should heed because advisors are among the biggest audiences for ETFs and they’re among the biggest drivers of growth in this corner of the fund universe.
Need for Specialists Is Clear
The most recent addition of ISS Market Intelligence’s ISS MI Advisor Pulse Series – Specialists and Teams survey , which polled 782 US-based advisors, confirms are advisors want more interaction with specialists and that pertains to a variety of asset classes.
“As interest in alternatives has surged, 42% of advisors stressed the importance of asset managers providing alternatives specialists to help them make informed investment decisions,” according to ISS. “Notably, this was even more pronounced among wirehouse advisors at 56%. Opportunities to connect with advisors were not only limited to non-traditional players, as 41% of advisors underscored the importance of asset managers providing portfolio construction specialists.”
As noted above, two the primary areas in which advisors want more bespoke attention from specialists are alts and ETFs. Asset managers need to listen up because data indicate those trends aren’t going to wane over the near-term. If anything, they’ll intensify.
“This interest is set to carry into the immediate future, with 27% of advisors planning on increasing meetings with alternatives specialists over the next 12 months and 26% doing so with ETF specialists,” adds ISS. “The constantly shifting investment landscape means that advisors want to meet with specialists frequently on these topics. 35% of advisors wanted to meet with an alternatives specialists at least once a quarter, as did 35% of advisors for portfolio construction specialists and 34% of advisors for ETF specialists.”
What Advisors Don’t Want
Smart advisors are always looking for efficiencies and one of the easiest ways to realize that objective is on the time front. Said another way, time is money, advisors know as much and as such, they don’t want their time wasted.
For folks on the product side of the equation, the lesson is it’s likely best to let a specialist handle advisor meeting on their own without interference from a wholesaler. After all, a two-person meeting is likely more time-efficient than a three-person interaction.
“Asset managers face a dilemma in having them work more independently. Advisors expressed ambivalence over whether wholesalers need to be present in meetings with specialists, with only 28% saying they preferred the wholesaler’s presence,” concludes ISS. “Still, advisors stressed that their top challenge of working with them is specialists’ lack of understanding of their business, highlighting the need for wholesalers to provide proper context and insights on advisor behavior for the specialist. Addressing these challenges is critical before deploying specialists on their own.”
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