Agents See Opportunities In Alternatives To Mutual Funds
While agents like Michael Goss and Thomas Mignone will continue to market mutual funds (see cover story on page 4), they see new opportunities for investors in both wrap accounts and separately managed accounts.
“The industry is moving towards wrap accounts,” says Goss, who is president of Michael Goss and Associates, Overland Park, Kan.
Wrap accounts pay commissions to advisors as an annual fee that is a percentage of an investor’s portfolio, explains Goss. Wrap account commissions are not transaction-based, so it’s in the advisor’s best interest to grow the portfolio. Both the investor and the advisor benefit from the success of the investments, says Goss.
Mignone, a detached MONY agent with Capital Management Group, New City, N.Y., notes that he will put clients who don’t want a commission relationship into a wrap account with no-load funds and charge a fee. “From that perspective we solve the commission issue and we have more of a fee relationship,” he says.
But Mignone also offers separately managed accounts for clients with large amounts of non-qualified money. “We’ve been using almost exclusively separate account management, as opposed to mutual funds.”
Mignone says a client will gain some tax efficiencies when using separate account management.