Advisers crave direction from wholesalers

Advisers, hungry for market information in this troubled environment, are turning to asset managers for help. And those not responding with timely information may suffer for it, according to a recent survey of adviser satisfaction conducted by Financial Research Corp. of Boston and consulting firm Horsesmouth LLC of New York. "If advisers [want] information or talking points they can use with their clients, and you are not there for them, it has the potential to have a severe backlash on your business," said Craig Kilgallen, vice president and director of adviser insight at FRC. The survey, conducted in July and August, included 1,860 advisers and 182 branch managers. Nearly half of the advisers, or 47%, reported that during times of financial upheaval, their need for service from wholesalers was greater. Little more than half (51%) said their need stayed about the same. "It doesn't need to be a formal value-added program," Mr. Kilgallen said. "[Advisers] just need content." Branch managers were more adamant. Almost two-thirds (66%) said the quality of the wholesaler and the value-added programs was a critical factor in gaining access, Mr. Kilgallen said. The 54 asset managers named as the most effective in responding had to be cited by at least 20 respondents. Russell Investments topped the list. Of respondents using the Tacoma, Wash., firm's funds, 98% reported above-average satisfaction with the wholesaler's response to their needs. Russell's Rapid Response Program offers market information through conference calls and supporting materials on its website. "In the extreme three-week period in September, we did six calls," said Tim Noonan, managing director of the products-and-advice group. "The telephone conference calls with advisers drew at a minimum 500 participants, and for some calls, over 1,000 people called in." A year ago, the largest call had 200 participants, he said, adding that visits to the adviser website grew 40% in September. American Century Investments, which ranked second, is posting more-frequent market commentary on its website. "Internally, we added a financial-crisis area where we gather [information] for use by our salespeople," said Casey McCarthy, vice president and manager of value-added sales at the Kansas City, Mo.-based firm. American Century also has a PowerPoint presentation in the works called "Putting Today's Market in Perspective," which offers a historical perspective and recommendations for advisers, he said. Because time is tight for advisers, they need to identify the client calls that will be the most fruitful, said Scott West, managing director and head of consulting for Van Kampen Consulting, a division of Van Kampen Investments Inc. of Oak Brook Ill., which was recognized by 86.6% of the advisers surveyed. In October, the firm launched Wealthy Skepticism, a program to help advisers identify skeptics among their clients. "The skeptics are the most misunderstood," Mr. West said. "They have a temporary healthy delay of judgment. Knowing how to manage the skeptic can be a profitable call." Historical market data are useful when communicating with clients, said Jay Hutchins, president of Comprehensive Planning Associates Inc. of Lebanon, N.H., which has $30 million in assets under management. "It's hard to find the time to put something like that together — especially when you are re-balancing portfolios and doing tax loss harvesting," he said.

UNCERTAINTY PREVAILS

Many firms send out market information, said Wayne B. Titus III, president of AMDG Financial of Plymouth, Mich., which has $30 million in assets under management. "My approach is to send out a letter which is specific to our clients," he said. "I use some of [that] information as a base." "It's helpful to have information so you can say that this is not the first time we have gone through a downturn," Mr. Titus added. Even with additional data, uncertainty prevails. "This time, we really don't know what is out there ahead of us," Mr. Hutchins said. "There will be a lot less credit going forward. And those recoveries of 1987, 2001 and 2003 were financed with debt. It is a little bit disconcerting." The bigger question now is moving forward, Mr. Noonan said. "'Am I on track?' are the four most important words in the adviser vocabulary right now," he said. "Their clients want to know how to evaluate the wreckage to a nest egg and what to do next." E-mail Sue Asci at sasci@investmentnews.com.