The headline is intriguing, if a bit misleading, and the folks at Curian Capital LLC who make the claim are quick to point out that providing such a low-minimum entr?e into separately managed accounts is only part of what they have to offer advisors. The company’s management–including James Vitalie, executive VP of strategic planning (formerly Foliofn Institutional president), and Allan Chiulli, executive VP of marketing and research (formerly of Jackson National Life’s National Planning Holdings)–doesn’t claim that the firm is interested solely in small advisors. They present Curian primarily as a way for commission-based advisors to ease the pain of transitioning to a fee-based compensation model, while providing the diversification, customization, and tax efficiencies of separate accounts.
A subsidiary of Prudential plc, the U.K. insurer and bank (no relation to Prudential of the U.S.), Denver-based Curian began offering in March a $25,000 minimum investment separate account program, a Web-based product that provides access to 10 to 20 style-specific managers per account, and can accommodate more than 500 individual securities. While access to Curian’s Custom Style Portfolios (CSPs) starts at $25,000, much larger accounts are, of course, accommodated and encouraged, using fractionalized shares of up to 1/100,000th of a share. The company is self-clearing.
A demo of Curian’s offering showcased an all-electronic investment and reporting platform (called WebFlow) that is highly customizable and easy to use. The simplicity comes from its straightforward Web interface: since all the “paperwork” stays electronic, accounts can be opened in as little as 24 hours, the company says. The customization comes in several ways. In setting up separate accounts, for instance, the client can make social exclusions of types of stocks and can exclude specific equities. The platform also performs online tax lot monitoring and accounting. There is online support, and a support center staffed by humans that’s open 11 hours a day. WebFlow provides an online proposal generator, compliance monitor, and electronic filing.
As for easing the transition to fees, Curian’s Fee Advance Program will provide advisors with an upfront payment of up to 2.4 times the annual fee of the assets brought to the platform, with lesser percentages of the fee coming in years two and three, and then back up to the full fee in year four and following. There is a level fee option for the advisor who doesn’t want the fee advance. There is also a charge to the client if he withdraws funds within the first three years of opening an account. Chiulli notes that the platform is meant to be “a long-term investment vehicle, so we’ve had to put in short-term penalties.”
While the company hopes to attract institutions and individual RIAs, it’s clearly targeting broker/dealers as a major distribution outlet; Vitalie believes B/Ds will use Curian as a major recruiting tool, and will help them build recurring fee-based revenue.
While the company says there are “multiple breakpoints,” the maximum Curian fee is 1.49% for the minimum asset size of $25,000 invested totally with active managers, falling to 1.10% for accounts of $500,000 and up. The fee is assessed to the client by the advisor, who then can add his own fee.–