Displaying items by tag: asset managers

By Duncan MacDonald-Korth, CEO, AdvisorTarget

In this series, Duncan MacDonald-Korth, CEO of AdvisorTarget, shares insights on how intent data and predictive analytics can anticipate financial advisor data intelligence.

Data packs, or asset data, may be considered the only insight asset managers have into what advisors buy; but they are also a systemic issue in our industry that create a unique set of problems. The following are only a subset of why accessing data like this isn't enough to drive your company's revenue.

1. Asset Manager Reputation is Negatively Impacted

Data packs have a negative impact on advisors—ask any advisor and they will complain about how data packs annoy them.

Take this typical scenario from a top producer at a wirehouse in New York City: “Like clockwork, a few weeks after I make a trade, say for an investment grade bond fund, I get calls from 30+ wholesalers in the same week trying to sell me the same product. I can’t tell you how annoying that is.”

This hurts asset managers’ reputations with advisors. Instead of buying the product, advisors shun all calls from wholesalers.

2. Retrospective Data is Limited

Asset data is, by definition, retrospective. It can tell you what has happened but gives little insight into what will happen next.

This has the effect of creating dead-end feedback loops in which wholesalers pitch advisors on the products they have already bought.

3. Intent Data is Key

While asset-level data is highly valuable, true utility exists in knowing what advisors intend to do next. This is where intent data on advisors comes into play.

Instead of guessing what an advisor might buy, or pitching them products they recently purchased, asset managers can use intent data to get into the mind of advisors and sell them products in which they are showing active interest.

For example, imagine you are a travel agent. Would you want to try to sell vacations to people who have already purchased their vacation packages, or would you rather know which destinations clients are currently researching? It’s about what’s next.

Simply put, asset data is not enough to drive product distribution. To accelerate distribution and increase AUM, asset managers need to embrace data and technology to build effective distribution tools. Data-driven relationship marketing strengthens your advisor relationships because you are using predictive analytics to execute on the best next action through all stages in the sales cycle.

Empower your wholesalers with access to predictive financial advisor data intelligence. AdvisorTarget & Discovery Data: Predictive behavioral insight on the now. Actionable intent for the next.

(New York)

For many years ESG had been a fairly neglected asset class. Advisors and many retail investors thought that investing capital with moral considerations would hurt returns. Over the years many things have changed, including investors learning that ESG screens have actually led to outperformance in many cases and younger generations showing that they care a great deal more about these issues than their parents. Well, those stimuli have led to huge growth in the ESG space, and are leading to big revenue gains for asset managers. Fund providers are able to charge significantly higher fees for ESG-focused ETFs because of their moral importance to clients, and this has led to good fee revenue in an industry that is otherwise seeing contraction.

FINSUM: The key thing to remember here is that ESG funds don’t cost any more to run, so this is highly profitable for asset managers.

(New York)

BAML has put out a report chronicling a new outlook for stocks, and it isn’t pretty. The report shows that investors have the worst views on the markets in a decade. Investors are pessimistic about global growth and corporate profits, the combination of which makes them expect a weak equity market. Here is a summary of Bank of America’s report: “A poll of asset managers showed a net 60 per cent of those questioned think growth in gross domestic product will weaken over the next 12 months, the worst outlook on the global economy since July 2008 and below the trough in January 2001”.

FINSUM: So it is important to note that these are asset manager opinions, not individual investors. Accordingly, it may not be as much of a contrarian indicator as usual.

(New York)

One of the big themes in the asset management industry right now is the possibility of consolidation. A big plunge in asset manager share prices and falling fees has added motivation for managers to tie up to increase scale and efficiency. Invesco’s recent deal to acquire OppenheimerFunds is a great example. However, regulators are reporting discussing such deals and are apparently concluding that the passive management business has grown uncompetitive, with just three firms dominating the space. Interestingly, the worries over competitiveness are not centered on the asset management industry itself, but rather how having a few large managers, each of whom own each other and other companies’ shares, makes the whole economy less competitive. The big three asset managers—BlackRock, Vanguard, and State Street, are not the largest shareholders in 88% of S&P 500 companies. This whole situation, and the worries attached to it are referred to as “common ownership”.

FINSUM: One can see how this would make the economy less competitive, but more specifically, it may mean that it is harder for asset managers to push deals through.

(New York)

If you think the market has been bad overall, take a look at the asset management sector, which has been brutalized in the last few weeks. The S&P index of asset managers has fallen 14% this month, compared with a 9.3% drop for the market overall. That adds to a lot of pain already this year—the index has lost almost 25% of its value in 2018 and is headed for the biggest loss since 2008. Some, like leader BlackRock, have been hit very hard just this month with shares down 17%.

FINSUM: Weak fees and poor fund flows are the immediate problem, but they are a major issue because they support investors’ fears of disruption in the industry.