He credits the company with helping him convert his firm to a fee-based practice in 2001, which has increased profitability. "They gave us the pros and cons of the conversion and then provided us with the programs we needed to make it work," Richards says.
The firm's planner-centric mindset is the thread that ties it together, from its investment programs and proprietary research to the field surveys and innovations they drive. "Most of our changes come from the field," says Susan Neeld, the company's director of resource development. "Simply put, we see advisors as our business partners."
Numerous surveys in the past year have given Capital Analysts ideas about how to direct and manage its resources into meaningful programs that range from Web-based consolidated client reporting to a new salary deferral program for advisors. What are advisors saying about the firm? For one, 96% say that the broker-dealer is meeting or exceeding their expectations, according to survey results.
One reason for advisors' satisfaction is undoubtedly the expansive investment research and intensive analysis the company has designed and developed for nearly two decades. To give advisors an edge, the company has created proprietary quantitative and qualitative screens for ranking and rating both mutual funds and stocks. The research also provides the underpinnings for the wrap-fee portfolios the company develops. "What differentiates us here is that we take research and convert it into something that benefits advisors and their clients," Cogan says. "We hope we convert it into wisdom, which we strongly believe investors are willing to pay for."
On the mutual fund front, the company has been creating its Capital Analysts Preferred Statistical Leaders list since 1987, ferreting out the statistical fund leaders over 66 quarters. Available quarterly only to advisors who work with the company, the list is one of the oldest and most comprehensive mutual fund ranking and research lists in the country (it predates Morningstar).
In the stock arena, the company creates its Core Equity Stock Portfolio, which uses quantitative research and qualitative overlays to find the best and brightest 25 stocks over the ten economic sectors that the Standard & Poor's 1500 and the Morgan Stanley stock lists contain.
"With these 25 stocks, we cover the entire spectrum of investing," says Steve Mayhew, the company's senior vice president and investment guru, who has been overseeing research, product design and due diligence since 1986. Mayhew is responsible for bringing hedge fund of funds to Capital Analysts advisors, along with other alternative investments like commodities funds (Oppenheimer's Real Asset Fund, for example).
"For advisors to really benefit, they have to buy into our investment philosophy, which has been successful over a very long time," Mayhew adds. "Broad diversification is the cornerstone. We don't engage in market timing or sector rotation, though we offer these services."
Another cornerstone is the creation of proprietary asset allocation models, which the company has been building since 1988. "A lot of companies do this now, but we have a long history and track record of doing it right," Mayhew says.
The upshot for advisors is access to both mutual fund, stock and fixed-income portfolios that are widely outperforming their benchmarks. For the three years ended March 31, the S&P 500 was down 16%, while Capital Analysts most aggressive stock portfolio was down 16% and it's least aggressive portfolio was up 1%.