Archive for March, 2015

AK In The News: Shops Charge Ahead With Sales Hires As Bull Market Runs On

Wednesday, March 18th, 2015

I was asked to comment in an article in today’s Ignites (A Financial Times Service) on the hiring of sales professionals. A recent Cerulli report found that 41% of fund shops expect to add to their distribution sales forces this year. The question is, are these hires simply a reaction to the continuation of the bull market or are they more strategic in nature?

I take the view that they are more strategic, and a response to the expansion of the independent and quasi-indepenent advisor networks. There are more advisors out there working for varied types of sponsor firms. You need to be able to provide support to each of them.

To quote from the article: “RIAs’ and quasi-independent advisors’ growth has driven fund firms’ enhanced sales efforts in those channels, says Andy Klausner, founder and principal of AK Advisory Partners, in an e-mail response to questions. This has led to strategic distribution build-outs rather than full-scale expansions, he says.

“I think a lot of firms learned from the 2008 crisis and have been a lot more prudent in their hiring decisions; the old ways, of always hiring too many people during good times, has changed,” Klausner says.

Fund companies should create three- to five-year strategic plans when expanding their intermediary distribution teams, and adjust those according to firmwide assets, profitability and the effect of market fluctuations, Klausner says. Such planning helps protect against “knee-jerk” staffing cuts, too.

“Distribution is still needed during lean years — to train advisors, meet new advisors, hold hands, etc.,” Klausner says.”

Do you agree, or do you think fund companies are over-hiring?

AK In The News: How Federated Turned Its Flows Around: ‘Consistency’

Tuesday, March 3rd, 2015

I was asked to comment on an article in (a new on-line website geared toward portfolio managers) based on comments made by the CEO of Federated Investors, where he credited the consistency of the performance of many of their funds as the reason that they have seen a turnaround in flows from negative to positive.

Is ‘consistency’ the new buzz word? While it may not be the only driver of fund flows, I do believe that many investors are looking for the safety that consistent, steady returns promise. To quote from the article: “Fund industry consultant Andy Klausner adds that wirehouses and other distributors find the promise of modest but consistently positive returns appealing because investors are still skittish about the markets.

“Nobody wants hot money,” he insists. “Everyone wants longterm investors, and the best way to attract longterm investors is to outperform in a slow and steady manner.””

Transparency still matters, but in the wake of the financial crisis so many firms have addressed this issue head on that has now become the norm – the expected – rather than the exception. Again, quoting from the article:

“While it’s true that transparency is important to financial advisors, it is so common that most FAs take it for granted, says Klausner. “So when a firm like Federated makes announcements about performance, it makes sense to focus on something like consistency – something that really resonates.””

Especially now with the long expected normal bull market correction still somewhere over the horizon, not losing money becomes as important as making money.

What are your thoughts?