American Funds, Vanguard, BlackRock, JP Morgan, and First Trust have all been named Best-in-Class brands by advisors, according to a new ISS Market Intelligence survey of 802 U.S.-based financial advisors.
But with thousands of asset managers to choose from, getting on an advisor’s radar can be hard to do.
“Advisors are inundated by outreach and content from asset managers and other providers, and they need a compelling reason to engage,” ISS MI wrote in a recent whitepaper that explains how asset managers can boost advisor engagement by using value-add programs.
For advisors, an asset manager’s brand is incredibly important. The vast majority of advisors (86 percent) said that a strong brand was an important attribute when it came to recommending asset managers to clients. Twenty-two percent of RIAs said it was “extremely” important.
Advisors rated trust, performance, and ease of business, in that order, as the three most critical factors when making an assessment of an asset manager’s brand. RIAs and independent, regional, and bank channel advisors placed more importance on trust than did wirehouse advisors, with 63 percent considering it extremely important.
However, according to ISS MI, an advisor’s assessment of a brand can often change depending on who they chose as the best-in-class manager. Advisors who chose First Trust as the best-in-class brand placed higher importance on ease of doing business. On the other hand, advisors who named American Funds as best-in-class were more concerned with the trust factor.
One way that asset managers can get more engagement from advisors, ISS MI wrote, is by investing in high-quality value-add programs, which can influence an advisor’s selection of a manager.
According to the company, value-add programs feature four core areas: practice management, portfolio construction, goals-based planning, and wealth management.
The majority of advisors surveyed said that they primarily used practice management and value-add support from asset management firms. When deciding which asset managers to recommend to their clients, 63 percent at least somewhat agreed that it was important for an asset manager to provide high-quality practice management and value-add content and tools.
On the other hand, more than a quarter said they didn’t need better product and portfolio support when using annuities and guaranteed income solutions with clients.
When it comes to the top challenges that advisors face, more than half (55 percent) of advisors overall ranked new client or business development as one of their top three challenges in 2023, making it the most cited concern. Other top-three challenges included compliance (37 percent) and managing their practice, business, and staffing (33 percent).
It’s important to note that value-add programs also don’t depend on fund performance.
“During 2022, when many traditional long-only fund managers [were grappling] with underperformance and persistent outflows and it seemed that nothing was working, value-add programs were one way to sustain and nurture relationships until things turned around,” wrote ISS MI. “We assert that value-add programs will remain a mainstay of advisor engagement strategy in the future.”