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Clarity Counts More Than Results

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“Fund managers that can clearly and concisely articulate their investment philosophy and strategy are more likely to garner interest from advisors and attract assets,” says Mickey Janvier, head of Wealth Management Americas for Aberdeen Asset Management.

A recent study by Aberdeen found that 59% of the 201 registered investment advisors polled by at November’s Charles Schwab IMPACT conference named clarity on the fund manager’s investment philosophy and strategy as the most important attribute to consider when recommending a mutual fund to a client. Two-thirds (67%) of advisors surveyed agreed that investment products have become increasingly difficult for clients to understand, compared with 33% that did not believe investment products have shown an increase in complexity.

“Simple, open and honest communication from the fund manager is of utmost importance to advisors when determining which funds to invest in on behalf of clients,” said Janvier, in a statement. “While this seems simple in theory, many fund managers continue to undervalue the importance of clear and concise communication with advisors about how portfolios are invested. These managers will have a difficult time remaining relevant in an environment where transparency is king.”

Of less importance to advisors in recommending a fund were historical returns (19%), fund rankings (10%), fund manager tenure (8%) and brand name (3%). However, the majority of advisors (67%) also agreed that these new, more complex and sophisticated products generally offer valuable benefits that can help clients achieve their investment objectives.

The survey also found that 60% of advisors believe the No. 1 way to stay up to date on new products being introduced by the asset management industry is through their own online research. Other popular ways cited by advisors to get up to speed on the latest investment products and solutions were via industry trade publications (20%), wholesalers (15%) and industry conferences (5%).

“In a world that increasingly favors simplicity and rejects excessive complexity, fund managers who can effectively leverage digital channels to help advisors understand how portfolios are invested will be the biggest winners,” said Janvier.

Brand Preferences

When it comes to naming names, advisors pick all the big companies as their favorite fund purveyors, according to Phoenix Marketing International. But interesting details emerge in the survey results—especially when the responses are broken down according to the affiliation models of individual advisors.

Phoenix’s semiannual survey of financial advisors was conducted in November among 1,318 advisors who recommend securities, retirement services and/or insurance products to their clients. It asked advisors which brand of funds they were most likely to recommend in the next six months.

Advisors with national full-service firms prefer (in descending order): BlackRock, iShares, American Funds, JPMorgan Chase, Wells Fargo, PIMCO, TD Ameritrade, Franklin Templeton, PowerShares and Fidelity. Reps working for regional broker-dealers say their favorites are American Funds, Franklin Templeton, JPMorgan Chase, Wells Fargo, BlackRock, iShares, New York Life, Charles Schwab, ING and PIMCO.

Among reps affiliated with independent broker-dealers, the preferences are American Funds, Franklin Templeton, BlackRock, PIMCO, iShares, Fidelity, PowerShares, American Century, Oppenheimer and T. Rowe Price. Registered investment advisors say they like Vanguard, iShares, PIMCO, PowerShares, BlackRock, State Street, Fidelity, American Funds, WisdomTree and Franklin Templeton


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