Face it, fund companies. It’s no longer enough just to push products. Financial advisors want more.
With more than 16,000 individual investment management firms registered with the ICI, the asset management industry is far from lacking suppliers of financial products. At the same time, advisors are seeking to spend more time with clients, as opposed to learning about the latest, greatest mutual fund or exchange-traded fund.
As a result, asset managers are being forced to move beyond pushing products to move the needle, says Matt Oomen, global head of distribution at BNY Mellon Investment Management.
“If you think about competitive advantage, price or differentiation, it's getting harder to differentiate on products,” Oomen said. “And so we see asset managers having to provide more services, technology support, education to remain relevant and ultimately provide a better partnership to advisors.”
Steve Stanganelli, certified financial planner with Clear View Wealth Advisors, notes that fund companies have been improving their website tools and resources to provide more education to retail investors. He points out the fact that this is fairly evident with the content posted at all the major mutual fund and ETF giants.
The ones he appreciates the most are the firms that provide extra educational materials focused on explaining special tax issues like opportunity zones, oil and gas partnership tax deductions, or tools to manage volatility risk, like flex options.
“I also like how some firms offer lots of continuing educational content and market commentary,” Stanganelli said. “In this group, I’d place firms like Apollo Global, they have a full suite of continuing education tools under the label of ‘Apollo Academy.’”
As a practical matter, he says firms can best help advisors by, being able to integrate their fund data with the planning software that an advisor is using. This really helps with getting up-to-date data into a client’s financial plan in his opinion.
Daniel Lash, certified financial planner at VLP Financial Advisors, has reached the point where if a fund wholesaler is merely pushing product instead of adding value, he will avoid meetings with them.
“I think you will continue to see the evolution of fund companies and their wholesalers continuing to provide additional support, ideas and possible assistance well beyond just product information,” Lash said, adding that he finds it beneficial when asset managers share “best practices they are seeing in other advisor firms.”
Brian Matthews, head of investment strategy at Domain Money, says improving investment and education acumen across the board among financial advisors would generally improve the customer experience and ultimately make the services a financial advisor offers more effective.
“As the industry continues to move toward cheaper, model-portfolio-based asset management practices, some advisors are not taught enough about the underlying products their clients are invested in,” Matthews said. “While some asset managers do a good job in providing ongoing education and materials that are useful, it can be hard for them to see the fruits of that labor in that it rarely leads to an increase in sales in the short term.”
James Rockwood, founder and CEO of CapIntel, believes promoting financial products is only half of the asset-wealth equation. In his view, fund companies need to prioritize providing education and support for advisors if they want to build strong relationships and grow their business.
“Offerings could include in-depth content, training and visual aids to provide relevant context about industry trends, investment strategies and risk management,” he said. “This, in turn, highlights a financial product's value, but more importantly, shows a level of care and diligence.”
Additionally, Rockwood feels that ongoing support through personalized guidance promotes long-term client success and enables advisors to foster strong client relationships as well.
“Ultimately, fund companies offering a more holistic service for advisors will unlock mutual success for both parties,” he said.
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