Archive for the ‘Articles / Publications’ Category

AK In The News: The Bill Gross Saga Continues – Does It Matter?

Thursday, October 22nd, 2015

I was asked to comment for an article in today’s Ignites (A Financial Times Service) about the $200 million law wrongful termination lawsuit filed by Bill Gross against Pimco, his former employer. Ignites conducted a poll asking who has the most to lose from this lawsuit. 42% of respondents said that the suit shines a negative light on both parties, 22% said that Gross could be the biggest loser, 19% say Pimco stands to lose the most while 17% said that Janus (where Gross works now) could lose the most.

My take on the law suit is that it is much ado about nothing. Unlike the frenzy, gossip and media spotlight that Gross’ departure garnered last September, the filing of this lawsuit has been quietly reported and caused barely a ripple. To me, this  indicates that people are over the saga and don’t really care any more.

Sure, if it goes to trial, there could be some ugly gossip spread and the media might get back on the bandwagon. This possibility makes it most likely that some type of settlement will occur. But in any case, all of the parties except perhaps Janus were hurt significantly by this very public divorce last year. The damage has already been done.

Some investors left Pimco with Gross, others stayed and still others probably decided to move somewhere else all together. But that was over a year ago. I highly doubt that this rehashing of this very public breakup will change many minds, or cause a great deal of money to move at this point in time.

Obviously feelings were hurt and a lot on anger still exists – at least on the part of Gross. But I think most everyone else has moved on.

AK In The News: Why All Planning Firms Could Use a Robo-Advisor

Thursday, September 17th, 2015

My opinion piece on Robo-advisors was published in today’s Financial Advisor IQ (A Financial Times Service). My general assessment is that advisors and advisory firms should embrace the concept where it fits into their businesses, rather than fight the trend. Three potential fits include:

Assist with client segmentation. As many advisors grow their businesses, they face the issue of having too many clients — and they often have to grapple with the issue of what do to with smaller, less profitable clients. They also have to turn down prospective new clients who don’t meet their account minimums.

Advisors can use robo-advisor services as an alternative for clients or potential clients who don’t fit into their current business model. Rather than turning them away, advisors will be able to keep them.

As client assets grow over time, and these clients need more-sophisticated services, they can be migrated into the advisor’s core business. And at that point they become more-profitable clients. Or, if they are happy, they remain as robo-type clients — the advisor’s revenue from them might be smaller, but they are spending a lot of time or money on client service.

Attract family members of clients. Advisors often struggle to effectively attract the family members — typically children — of current clients. This is a serious setback, as developing such relationships is crucial to building a longer-term sustainable business. But a robo-advisor service component can mitigate this threat, as such systems allow these family members to become part of the firm even before they amass assets. As a result, these new clients will learn the basics of investing and be more apt to remain long-term clients.

Attract millennials. Similar to the matter above, as advisors grapple with the issue of how to service the newest generation of investors, they are offering them what the competition is offering — again without disrupting their current business model. Over time, as advisors attract more millennials through the robo-advisor model, they will learn more about them and their long-term needs and traits. Indeed, they will be better prepared to adjust their entire business model in the future if necessary.

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?

AK In The News: F-Squared Settles Fraudulent Advertising Charge With SEC

Tuesday, December 23rd, 2014

I was asked to comment on an article in today’s Fundfire (A Financial Times Service) about F-Squared Investment’s settlement with the SEC. The firm, a very large exchange traded fund (ETF) strategist, agreed to pay $35 million and admitted wrongdoing in the case concerning false performance advertising.

The firm advertised real performance which was in fact hypothetical back-tested data. They also made a performance calculation which inflated performance by 350%, and the former CEO has also been charged with making false and misleading statements to investors.

I was asked how this would affect the firm’s distribution. Simply, I think it will be fatal. This is not simply a case where the SEC has alleged something, which may or may not be true. The firm has admitted that it has done what it has been accused of. From a due diligence point of view, and considering fiduciary responsibility, how can a sponsor firm, who is after all making recommendations to its advisors, who is in turn making them to investors, allow this firm to remain on their platform?

Many firms put the firm on “Watch” when the allegations surfaced – the correct move – and did not allow assets to be added. But now, the only correct move is to terminate F-Squared and help clients move the assets elsewhere. The firm obviously lied in the due diligence process, so this seems like a very clear case of sponsor’s being better off moving on. I personally can not see any rationale for not terminating this relationship.

To quote from the article: “The result of the investigation, and the fact that F-Squared admitted wrongdoing, could have serious consequences for the firm’s distribution prospects, says Andrew Klausner, a strategic consultant with AK Advisory Partners.

It could be “a kiss of death in terms of distribution through broker-dealers and RIAs,” Klausner says. Since the firm admitted wrongdoing, “I don’t know how [broker-dealers and RIAs] could justify keeping them on their platform.””

The firm does have new management,and in time, they should be allowed to present their case, but I would be hard pressed if I was in charge of a sponsor’s due diligence to allow them in now. I would much rather be competing against a sponsor who continues to use the firm than to be that firm!


The V-Word Is Back

Tuesday, October 7th, 2014

This the name of our 4th quarter newsletter. The V-Word is of course volatility. After a long hiatus we are back to seeing +/- 100 moves in the DJIA on a daily basis. But this is not necessarily a bad thing, as perhaps the market is finally acknowledging that is all not well in the world.

The newsletter also contains an article on “Creating A Buzz To Grow Your Business.” It talks about ways that you can act as your own publicist to grow your business.

Click here to see the entire newsletter.

AK In The News: Gross’ PIMCO Exit Throws Door Open For Institutional Competition

Monday, September 29th, 2014

I was asked to comment on an article in today’s Fundfire (A Financial Times Service) about the departure of Bill Gross from PIMCO last Friday (he left the firm to go to Janus Capital).

Frankly, I was not surprised by this move and think that it is a longer-term positive for both firms. Ever since PIMCO’s former CEO Mohamed El-Erian left in March, the firm has been in turmoil and Gross’ future there has been in question. Stories have emerged of erratic behavior, mistreatment of employees and most recently a threatened exodus if Gross stayed.

While we will never know the true inner workings of the firm, perception is reality as they say, and it had become increasingly clear that if Gross stayed so would the turmoil. His abrupt departure reinforced the animosity between the parties and the untenable nature of the relationship. From that perspective, it is good for PIMCO to get this negative attention behind them and focus on the future. They have moved swiftly to name replacements and try to begin anew.

The negative for PIMCO is that Gross’ departure will trigger automatic mandate reviews by institutional investors, and analysts expect the firm to lose billions of dollars. But this increased scrutiny (being put on “Watch” lists) was already increasing with El-Erian’s departure and underperformance. At least the departure of Gross allows the firm to position that all of the changes are over and allows it to look to the future. Already the California Public Employee’s Retirement System (CalPERS) has announced that it has no plans to move the approximate $1 billion they have invested through PIMCO.

For Gross, the move is one which allows him to try and save his reputation, which has been hurt by not only the turmoil and negative press that has been coming out, but also by the recent underperformance of his Total Return fund. There can be no question that the unraveling situation had to be affecting his ability to manage effectively. While he is leaving to manage a much smaller fund, he does have the opportunity to reestablish himself at Janus Capital and grow his influence at the firm over time.

To quote from the article: ““There’s been such a negative cast on Gross since El-Erian left the firm, [with] people blaming him,” says Andy Klausner, principal at AK Advisory Partners. “It was becoming harder and harder for him to stay,” he says, adding he wasn’t surprised to hear Gross was leaving. “All in all, it’s probably positive for PIMCO,” says Klausner. And the move isn’t bad for Gross either, as he can still ride his strong reputation as a fixed income expert, says Klausner. “It’s a good PR move for [Janus],” he says. Gross’s name will lend himself well to be a spokesperson for the firm.”

AK In The News: Layoff Axe Still Swings Often, But With Less Force

Thursday, May 1st, 2014

The recent announcement that State Street is going to lay-off 400 employees prompted Ignites (A Financial Times Service) to seek my opinion on whether or not this signaled the beginning of a trend in the industry. I do not believe that it does.

Layoffs are a natural course of business, especially as companies increase their technological capabilities. And emotions aside, this layoff number is relatively small, less than 1% of the firm’s total workforce. Layoffs are also natural after mergers and as a way to reduce duplication. While layoffs will always be an unfortunate part of any business, I don’t think too much should be read into this announcement.

The industry has done a much better job since the financial crisis of restraining itself when hiring during good times. To quote from the article:”“Before the crisis, the industry was known historically for hiring a lot during the good times and laying a lot of people off during the bad times,” says Andy Klausner, founder and principal of AK Advisory Partners. “But since 2008, the industry has gotten better. It hasn’t overhired during the good times, so the overall level of layoffs has probably declined.”

The dismissals from State Street are not part of a trend toward more layoffs industrywide, but rather a move toward leaner back-office operations and support staff workforces, according to Klausner.

“You’re not hearing about massive layoffs anymore,” he says. “You’re hearing about rationalization in servicing clients and replacing the human factor with technology.”

Indeed, industry layoffs have grown less frequent. Experts say operational employees are the ones receiving pink slips, particularly those made redundant due to technological advances and structural changes at the firm.”

What do you think?

AK In The News: Sun Belt Bank Taps FolioDynamix For SMAs

Thursday, November 21st, 2013

I was asked to comment on Trustmark’s (a Mississippi-based bank) recent decision to offer separately managed accounts through FolioDynamix, a turnkey platform provider; the article was featured in today’s Fundfire (A Financial Times Service).

FolioDynamix has seen a large build-up in its bank business, and the question is why. I think the reasons are two-fold. First, banks are increasingly embracing the idea of open architecture (in lieu of offering only proprietary products), and second, it is easier for most of them to “buy” a third-party platform than to build one from scratch. They often don’t have the in-house expertise to build such platforms in any case. Yes, banks may be late to the game, but if other similar deals follow, it could be a boon for these turnkey firms.

To quote from the article: “Banks eager to get into the fee-based market are more likely to hire turnkey firms than try to mimic what other advisory shops have assembled from scratch, says Andy Klausner, principal of AK Advisory Partners,  a consultancy. “I think very few banks have the expertise or are willing to spend the money to build their platforms,” he says. “Especially with the proliferation of third-party offerings, buying is definitely better than building.””


Creating A Successful Marketing Strategy

Tuesday, April 16th, 2013

The ultimate goal of any marketing strategy is to help you grow your business and increase your brand awareness; cementing trust with current clients is a nice by-product as well. How does it work? Developing awareness of your brand  – who you are, what you do and why you are uniquely qualified – should in turn help you generate leads which, through education and dripping on prospects, will lead to more clients.

In order for a marketing strategy to be successful, it must be multi-faceted, realistic and implemented consistently over time. There aren’t a lot of short cuts here – it takes time and patience. Depending on your resources, there are a number of ways in which you can accomplish each of the above steps; only spend what you can afford to, and make sure that you and your staff have the requisite time to dedicate to marketing without negatively impacting your current business.

Your marketing plan – the written description of your market strategy – should:

  • Detail specific activities you intend to undertake;
  • Identify the audience each activity is targeted to;
  • Specify how you’re going to measure success;
  • Be flexible enough to allow adjustments as necessary; and
  • Stipulate who on your team is responsible for each activity.

How do you create awareness, generate leads and drip on prospects? Click here to read our complete new White Paper.

A Look Back At My 2012 Top 10 Predictions

Tuesday, December 11th, 2012

It’s time to look back at my predictions from a year ago and see how I did. All in all, a mixed bag of results. Next week, I’ll have my 2013 predictions. (Each predication is followed by comments in bold.)

10 – The Presidential election is the Republicans to lose. I retain this view even as the Republicans (led by the House) are self-destructing and opening the door for Obama. If the candidate is Romney, Huntsman or someone with similar moderate views that can attract independents AND there is no third-party candidate, then Obama is out. If, on the other hand, the candidate is Gingrich, Paul, Bachman or some other candidate who can not attract independents AND/OR a third-party candidate emerges, then we will have four more years of Obama. I know that that is a lot of “ifs,” but we are still early in the race. My money is on a Romney presidency starting in 2013. I was wrong on this one. The Republicans did pick a candidate that could have won, however, I think it’s fair to say that he didn’t run a very compelling campaign – he let his opponent define him from the beginning of the campaign. I think over time, Republicans will view this as one of their greatest disappointments ever – if was their election to lose, and they did.

9 – The Democrats will retain control of the Senate, although with a smaller majority, in part because like in 2008, the Republicans will put up some unelectable candidates (can anyone say Rhode Island?). The Republicans will retain the House of Representatives, which will look pretty much the same as it does now. Sorry Nancy. Pretty much right here except that the majority is a little larger in the Senate although that doesn’t make a whole lot of difference. Again, this was more the Republicans losing than the Democrats putting up a compelling case.

8 – The Supreme Court will uphold the legality of Obama’s Health Care plan, but this will make it an even more polarizing issue in the election (since the decision should come in the Spring). If a Republican is elected President, it will be continue as an even more contentious subject in 2013 and beyond, as the legislative branch will take the lead in repealing parts of the plan. I got this one right – but since Obama was reelected it won’t be as contentious next year as it would have been. There will be no repeal.

7 – The stock markets will end slightly up for the year, helped by a year-end relief rally after the election. Volatility should be relatively low, as many investors will stay on the sidelines because of all of the political uncertainty. Another “lost” year like this one. It will remain a stock pickers market – driven largely by earnings in the few sectors of the economy that will do well. Pretty close here – although the year-end rally has been held in check by the fiscal cliff discussions. It has definitely been a stock pickers market though.

6 – The U.S. economy will not go into recession, though following continuing turmoil in Europe, will get dangerously close. Unemployment will dip somewhat then increase again to about 9% at election time because there will be no significant job bills enacted and political gridlock will dampen demand. Housing will remain in the dumps. The positive economic news of the past month is deceiving. Kinda right, kinda wrong. No recession in the US, but problems do remain in Europe. Unemployment has not gone back up – but it hasn’t gone way down either. Housing, however, has made a good recovery, which bodes well for the future.

5 – Europe will go into recession (maybe not all countries but as a whole). There will have to be a number of emergency summits once again, as everyone realizes that the actions enacted in 2011 were only band-aid measures and that real problems remain. The divergence between the stronger Northern European countries and weaker Southern European ones will continue. Many of the European countries have gone back into recession, and Euro problems are far from being solved. 

4 – The Euro will survive 2012 – barely – and I imagine a year from now the outlook for its continuation past 2012 will be very bleak. Back to those summits for a second – hopefully there won’t be 8 or 9 like there were this year! The Euro did survive. I’m not sure how many summits there actually were, but it does seem like there were fewer than last year.

3 – The Occupy movements will continue sporadically throughout the year as economic conditions stagnate. I don’t think they will pick-up significantly, however, and absent the emergence of any real leadership – to voice a unified concern or theme in a cohesive manner – the November elections might signal their end. I was on target here – the Occupy movement has pretty much disappeared from public view. I do have to say, however, if you walk in front of the Trinity Church, by Broadway and Wall Streets, there are still people there. However, the only reason I know that is because I was there recently – it has faded from media interest.

As for the financial services industry:

2 – At least one major brokerage firm will be sold or spun off by its bank-parent (this excludes Morgan Keegan; in this case, if MK is not sold by the end of the first quarter, I predict that Regions Financial itself will be gobbled up by a larger bank). The bank/brokerage marriages have in large part not worked, so 2012 could be the beginning of the end for many of these relationships. Hint – ML. I am a little early on this one – didn’t happen in 2012, but… On Morgan Keegan, the sale to Raymond James was a good strategic fit, but the jury is still out if Regions survives.

1 – The wirehouses will continue to lose advisors to the independent, RIA and semi-independent channels. The attractiveness of working for one of the big four is just not what it used to be – both from a reputational point of view as well as an ease of doing business one. The wirehouses aren’t going to disappear though – just continue to become less dominant. I was right on target here. The RIA space did continue to grow – but as I have said many times, the wirehouses aren’t going anywhere.

2012 was an interesting year from both political and economic prospectives. Can’t wait to see what 2013 holds.