Nicsa members received a detailed look into product lifecycle challenges from the distributor’s point of view during the second day of GMM 2020, held virtually on October 8.
Linda York, Senior Vice President of Cogent Syndicated, moderated the event, which featured diverse perspectives from Bank of America, LPL Financial, and Morgan Stanley.
Robert Pettman, EVP, Advisory Platforms and Products at LPL Financial, said many asset managers have been waiting for the opportunity to turn away from legacy distribution models toward something more modern — and the pandemic has pushed the industry toward virtual environments.
“Now, we’re all living in a hybrid space,” Pettman said. “The question is, what happens when we come out of it? To go back to the status quo would be a miss. The challenge is, there’s no formula. Even on the distribution side, we’re trying to work that out. We want asset managers to succeed. We want their distribution models to be efficient; we want our advisors to be efficient. So we’re thinking through how to make these models most successful.”
Ben Huneke, Managing Director at Morgan Stanley, echoed Pettman’s view that the events of 2020 have broadened technological opportunities.
“I think technology gives us an extraordinary ability to really hone in on our activities in the branches, and to be much more efficient and have a greater understanding of how effective our resources are at driving results,” Huneke said. “To me, it’s a huge opportunity for asset managers to be more knowledgeable, efficient, and scientific about their distribution efforts.”
From the retirement and institutional side, Erin Farrell Donnelly, Managing Director at Bank of America, pointed to distribution challenges for asset managers in terms of the role that packaged product plays in garnering defined contribution (DC) plan flows.
“For asset managers, competing in a packaged-solution world, whether it be target date or managed accounts, has its own set of challenges,” she said. “Looking at their own areas of specialty and expertise in terms of aligning to particular sleeves of investment opportunity — and then determining how to best align their distribution teams— is one of the biggest challenges.”
Huneke said building a scalable practice is challenging when the average financial advisor at Morgan Stanley manages assets for 160 families with vastly different needs.
“Instead of going in to sell a product that fits into a portfolio, asset managers can help our advisors build scalability and understand how to manage a business more effectively,” he said. “That’s where our biggest teams are struggling. It’s less about picking individual funds or products. It’s about managing a complicated process and building scale in the investment process so they can deliver on goals for their clients in a credible fashion.”
In terms of effective communication with advisors, Pettman said there’s no one way to achieve success, as different formats appeal to different people.
“Virtual workshops have been working well — one thing we’ve realized is that meeting content is often better virtually than it is in person because of the scalability,” he said. “You can bring in all sorts of subject manner expertise in an efficient way virtually versus what you can do with a one-on-one wholesaler interaction.”
Donnelly added that many asset managers have been getting better at profiling the advisors they cover and the clients they build their books around.
“It’s a shift to understanding who the targets are — the advisors and their teams — being an expert in their own firm and resources, and using those as opportunities to move the needle,” she said. “We’ll continue to see a shift toward more customized models on behalf of the sales teams. This new environment we’re in creates new ways of thinking in terms of how to tap into expertise.”
Note: Although the observations contained in this work represent the best thoughts of the individuals comprising the Nicsa panel, they do not necessarily reflect the views of Nicsa or any of its member organizations. Matters addressed in this work may touch upon legal or regulatory matters, however nothing herein is intended to be or should be construed as legal advice. You should contact your own counsel in order to obtain legal advice regarding these or any other matters.
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