Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Retirement Planning > Retirement Investing

First Allied's Campanale on Products to Get Retirement Back on Track: Weekend Interview

By John Sullivan

X
Your article was successfully shared with the contacts you provided.

If legendary financial services chief Jamie Dimon relies on your advice, it’s safe to say you probably know what you’re talking about. As one of Dimon’s direct reports while president and CEO of Smith Barney Consulting from 1995 to 2004, Frank Campanale met weekly with Dimon.

Now chairman and CEO of First Allied’s Wealth Management Group, Campanale oversees the expansion of a wealth management suite of products and services to First Allied’s private client group.

Did the trend toward fee-based business prompt your move away from the wirehouses?
No, after I left Smith Barney, I was actually going to another wirehouse. But I came across this smaller, more flexible firm which was better able to handle the industry’s toughest obstacles and hurdles like fee compression, market volatility and the fiduciary question (which, by the way, I don’t feel is a big deal since independent broker-dealers are largely acting in a fiduciary capacity already).

What’s your take on the reasons wirehouses were hurt so bad recently?
Advisors lost 40% of their revenue because $10 trillion of net worth vaporized. Fee-based revenue decreased by 40% overall. But transactional business fell much further because no transactions were being made. Suddenly, the transactional guys can’t make their mortgages.

What will it take to get retirement back on track for so many clients?
It’s cliché that we’re in a retirement crisis. I don’t think we’re there yet, but we will be in six or seven years as younger boomers retire. Products to address the crisis simply haven’t been invented yet. I think the next step is an insurance wrapper around a pool of ETFs and more involvement with futures and options to mitigate downside risk. I think these products will be about driving towards addressing a specific client risk rather than knocking investment returns out of the park.

Can you be more specific about the products “yet to be invented?”
What kind of vehicles will address an overly conservative client base that’s primarily looking to mitigate risk? They’ll come from the insurance industry, to a large extent.

Right now, $2 trillion is in managed money. But a very small percentage is in managed futures, which I think will increase. Hedge funds are seen as risky, which means they’re misunderstood. You’ll see an increasing use of hedging strategies in mutual funds and fund-of-funds. Also, private equity and non-traded REITs will play a greater role in the portfolio.

We also believe all-encompassing unified managed accounts and unified managed households that are comprehensive and uniform in their compliance will take on a greater role because they’re the best platform for advisors to act as the portfolio managers. Advisors acting as portfolio managers, as a business model, have grown significantly. They cut out the manager and save 30 or 40 basis points. And they now have access to CFA compliant third-party information.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.