Challenging the paradigm | Top distribution strategy trends for 2015 and beyond

paper with drawing chartA panel of experts from Boston Financial Data Services and Capital Group and EY Global Services speaking on distribution trends during a recent NICSA webinar speculated that it’s only a matter of time before firms such as Apple and Google enter the financial advice business.

While a shift to “robo-advice” may still be futuristic, changes occurring now are significantly affecting distribution strategies. Everything is subject to review.

This post examines how fund complexes can prepare to compete in these challenging times. A separate post will address intermediary oversight.

Transparency – A complex environment where demand for information and clarity is growing calls for a deliberate approach to every aspect of product management. Fund complexes will be wise to ask the following:

  • What do our products aim to accomplish for investors?
  • How will they be used by intermediaries and under what advisory model?
  • What does it take to support the advisors who will sell these products?
  • How can we customize our products to meet investors’ and advisors’ needs?

Fee-based advice – The rise of the fee-based advisor model impacts coverage and channel decisions. It also affects product competition and the portfolio construction process.

  • To stay competitive and expand investor “wallet share”, fund companies should: 
  • Broaden the sales focus beyond recent top-selling products.
  • Nurture positive sales relationships and increase opportunities to expand market share (i.e. partial channelization in major markets).
  • Deepen your understanding of intermediary firms and coordinate on a single firm-wide approach.
  • Introduce customization to the service model using sales feedback.
  • Reduce complexity of sales communications to a simple “heads up.”
  • Break down asset-based breakpoint walls by emphasizing the advantages of products and the firm’s brand.
  • Gain a better understanding of demographics and asset flows and use the knowledge to develop brand appeal to the end-investor.
  • Guard portfolio construction processes against shorter hold periods.
  • Participate in the passive versus active debate.
  • Actively discuss the organization of rating agency categories and evaluation of funds.
  • Bring intellectual capital to the marketplace in an educational way.

Panelists urged industry participants to look over the horizon and to anticipate and prepare for future changes, whether from within or outside of the industry.



NICSA: 8400 Westpark Drive, 2nd Floor McLean, VA 22102 • Tel: 508.485.1500 • Fax: 508.485.1560