Penetrating the RIA/Family Office Space

Author: NICSA

As fund managers increasingly turn to the unique RIA/family office market for growth opportunities, an effective distribution strategy becomes more important than ever. NICSA members were coached on how to successfully interact with key investment research teams — including Pacific Life, Independent Financial Partners, and Massey Quick Simon— during a recent #WebinarWednesday panel on the topic.

Emmy Bernard, Senior Managing Director, Client Development at Foreside Financial Group, moderated the discussion, which centered around manager and investment selection, relationship management, and best practices.


Matthew Babcock, Director, Head of Manager Selection at Pacific Life, said his company’s manager due diligence process involves four key areas: firm personnel, investment philosophy, investment process, and performance and risk.

“Within each strategy or category we look for a number of specific qualities,” he said. “We’re looking for talented, experienced, and deep investment teams with stable and supportive foundations at the firm level. We tend to focus on managers who have demonstrated a special talent in their skill set or asset class, and we want to see that the skill has been demonstrated consistently over time.”

On the quantitative side, Pacific Life uses a proprietary regression model to estimate the impact of factor exposures on the historical performance of active managers. “We primarily deal with active managers with our products, so this process separates the impact of a managers’ investment style from the true alpha added by the manager,” Babcock said.

Aaron Gilman, Chief Investment Officer at Independent Financial Partners, said his favorite type of manager is someone who has left an established firm to start an investment company. “We tend to gravitate toward smaller managers, essentially, who are more boutique in style,” he said. “They have pent-up ideas that they couldn’t put to use with large pools of money.”

Wayne Yi, Director, Head of Manager Research at Massey Quick Simon, said his group focuses on investment strategy and allocation first. “We want to get the asset exposure and the factors right before we start diving into individual managers,” he said. “If you call the ‘beta’ correctly, you should be able to generate the performance that you’re looking to generate. Then we’re looking for the managers that can execute in that strategy and generate excess returns on top of that.”


Babcock said Pacific Life sources its managers through a combination of meetings and screening databases. “Most of our searches originate from replacements that we have to make to subadvisors on our mutual funds or variable annuity subaccounts — we’ll become more active in screening as that becomes more imminent, and at that point we’ll look for candidates with specific attributes,” he said.

Gilman pointed to new registrations of funds and manager departures. “The best results we’ve had have been from just looking at new funds and registrations and looking for managers that may have taken a year off or something — a sabbatical — and want to get back in the game,” he said.

Yi stated that his firm looks for “talent that might be leaving [a larger firm] to create a more concentrated, more opportunistic product,” he said.


When interacting with his team, Babcock recommends keeping things simple. “Knowing our timeline … and reaching out once or twice a year keeps you relevant,” he said.

The hard sell of ‘we’re the best strategy’ or ‘we only have so much limited capacity’ — those never fly,” said Yi.

Gilman cautioned against superfluous marketing attempts. “Keep the fluff very light, if present at all,” he said. “I just want to know how you plan to sustain your edge, how you plan to add value above and beyond your fee, and what makes you different.”

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