Asset managers are expanding their distribution into new advisor segments and channels, according to a new Cerulli Associates report.
More than four in five (85%) assets managers said their top priority is to widen product distribution, Cerulli said, explaining that they plan to dedicate resources to various channels as headcount continues to grow at independent and hybrid registered investment advisors (RIAs). This is the second consecutive year asset managers chose this strategy as their top goal, Cerulli noted.
The Cerulli Edge U.S. Managed Accounts Edition also found that half of asset managers have their eyes set on rolling out customized solutions, with half indicating that they want to increase their ability to offer personalized investment solutions beyond just focusing on equity direct indexing. “As more advisors look to add personalization to their practices, being able to personalize beyond just equities through a multi-asset-class solution will become an important capability for managers touting personalization and customization,” said Matt Belnap, Cerulli's associate director.
Another priority is to create new investment vehicles. Nearly half (46%) see that as an important goal. The report noted that many firms that had long focused on mutual funds now have launched or are in the process of launching separate accounts. “This is, in part, due to advisor and home-office preferences, as wealth managers tend to favor deeper relationships with fewer product providers, though changing economics also plays a role,” the report said.
And as for product solutions, Cerulli noted that the ease with which advisors use ETFs in client portfolio and its relative tax advantages rated it a top product priority for asset managers this year. And while 62% said active ETFs are atop their list, it “presents untrodden ground for many managers,” Belnap said. ”If asset managers wish to see success in their active ETF endeavors, they must be prepared for an involved process that will take time and resources to reach fruition."
The other product priorities for asset managers are model-delivered separate accounts (50%), interval funds (46%), and collective investment funds or CITs (42%). The latter two, Cerulli said, are much less sought after by sponsor firms. “While interest in these types of products could be managers just looking to add where they currently have gaps in their lineup, careful consideration of whether there is appetite for these types of products at distribution partners will lead to a better chance of success for asset managers when they do come to market,” the report said.