From the July 2007 issue of Boomer Market Advisor • Subscribe!

July 1, 2007

Here's what RIAs want from their investment management partners

As broker/dealers boost the level of operational support they offer RIAs, investment managers have similarly stepped up the suite of services they offer to the independent channel. The most competitive players in investment management transcend the role of customized vendor and offer highly tailored, supplementary services to their largest clients. Smaller shops also can benefit from free, third-party research and expert consultative services.

For custodians and investment managers alike, research is a significant part of the value delivered to RIAs. Intellectual capital is translated to a firm's ability to provide high-quality service, and investment managers are drawing on packaged platforms to assist independent advisors.

Investment choice -- Demand for sophisticated planning has advanced investment choice, custodial platforms and innovative services offered by investment management firms. To help advisors in this complex and confusing environment, investment managers provide complimentary due diligence and competitive research on various fund sponsors. The teaming of custodial and investment services has improved transparency in a space muddled by product choice.

Technology and research -- Certain custodians have their own proprietary investment management programs and may offer bundled research to clients. RIA-specific service providers, such as Schwab Institutional, provide custodial and technical services, as well as a marketplace for separate accounts. This facilitates access and leverage with managed account platforms for RIAs. For example, some custodians offer research for advisors to compare the multiple managers available for separate account platforms.

Specialized research platforms can be cost prohibitive for advisors to license, but advisors can tap into investment managers and custodians for access to these programs.

At Nuveen, a client can ask for a competitive analysis of relevant managers. We use a program called Zephyr Style Advisor to create research reports consisting of charts and comparisons based on third-party research. Since many RIAs don't have access to Zephyr, our team can run these reports and assist in interpreting the results.

Another shared service between custodians and investment managers involves the customization of multiple strategy portfolios. In this space, asset management, portfolio rebalancing and tax monitoring (all within a single turnkey account) are a tremendous benefit to advisors.

Portfolio expertise -- RIA clients are demanding best-of-breed managers, and are looking to their investment management partner for help. They seek strategies that are not correlated to other investments in traditional asset allocation or traditional style boxes.

Wealth management experts at the firm offer specialized knowledge on how their firm's unique investment offerings fit within the overall client portfolio. Independent advisors can enhance practice management by employing the expertise of a wealth management team with highly skilled authors, researchers and technical experts. Wealth management subject experts specialize in topics such as asset protection strategies, Monte Carlo analysis, manager evaluation and selection, performance metrics, pre-CIMA training, and behavioral finance.

So what do advisors want from investment management firms? Intelligent research on managers and products, pure and simple. They want innovative ideas on how to add value to client portfolios, and they want timely and relevant information to assist in doing so.

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