Meredith Lloyd Rice

About Meredith Lloyd Rice

Meredith Lloyd Rice is a vice president in Market Strategies' Syndicated division. She manages the firm’s syndicated research products focused on the financial advisor market and is the lead author of the Advisor Brandscape® report. She has more than 15 years of experience managing research initiatives in the wealth management industry and has explored a wide range of business issues on the client and supplier side. Prior to joining Market Strategies, Meredith was an associate VP at Chatham Partners where she oversaw a team of researchers and managed the overall design, analysis and interpretation of large-scale studies for institutional financial services clients. Meredith earned an MBA from Thunderbird School of Global Management and a bachelor’s degree from Colgate University. She is a former collegiate rower who now gets her exercise chasing after her 2-year-old daughter and Clumber Spaniel.

Adapting to the New Normal

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Ready or not, the DOL fiduciary rule is here and changing everything. While many product providers and distributors have been preparing for months, the financial advisors they
rely upon are now beginning to feel the effects. Many advisors are regretfully watching their choice of available products constrict as their brokers/dealers eliminate certain products, asset managers and share classes. At the same time, advisors are facing higher hurdles in the form of additional disclosure and product justification, making their job of providing investment advice increasingly challenging.

While the industry’s heightened focus on fees is creating a windfall for passive managers, advisors are boosting their reliance on managed money or model portfolio solutions, effectively distancing the direct link between asset managers and advisors selling their products. This, in turn, is impacting the role of the wholesaler, shifting expectations from that of a product spokesperson to a technical industry expert. Continue reading

Advisors Expect to Increase Use of Active Strategies

Fact-Based Trends From Cogent Reports™    

Following a period in which advisor-controlled assets have been gradually shifting toward lower-fee, passively managed investment strategies, advisors still see an important role for active management. In fact, according to Cogent’s Advisor Brandscape, when advisors were asked to anticipate how their use of 15 specific asset classes would change, more advisors plan to increase their use of actively managed than passively managed equities over the next six months. This finding signals that advisors may be looking to diversify their clients’ portfolios, as more of clients’ core holdings have shifted to passive products. As expected, advisors in the broker/dealer channels are fueling the anticipated gains in actively managed strategies, while interest in active equities among RIAs is much weaker.

In addition, as advisors seek growth, four in ten (41%) plan to increase their allocations to emerging markets. Advisors’ growing interest in emerging markets represents a shift from last year, when only one-quarter of advisors said they plan to increase their investments in this area. Notably, interest in this category is primarily being driven by advisors in the National and Regional channels. Continue reading

Are Financial Wholesalers Going the Way of the Dinosaur?

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As technology becomes a bigger part of how financial advisors do their job, the need for external wholesalers is diminishing—at least in the traditional sense. To stay ahead of this trend, asset managers need to evaluate how well their current sales and marketing strategies meet the needs of advisors, as well as ways to leverage technology and tweak their distribution strategy to ride this impending wave of change.

Key things asset managers need to know:

  • Advisors have less time. Advisors are taking on more responsibility, enduring higher levels of scrutiny regarding how they service customers and utilizing more tools to help facilitate how they do their job. These factors have pushed a full 25% of advisors to decrease the number of wholesaler meetings that they accept. This presents the first challenge: In-person meetings have historically been a very important part of forging and maintaining strong relationships with advisors, so how do asset managers dial down the personal side of selling without putting the stability of the relationship at risk?
  • Technology is leading the way. You hear and read it everywhere. Email is the most effective and most desired form of communication, but the obvious issue is how to stand out among the hundreds of emails that land in the advisor’s mailbox. The second challenge: Email only works if the recipient is already engaged or open to being engaged. Adding another layer, if you are going to rely on email you better be sure the advisor you are trying to connect with actually prefers email. There is a whole subset that prefers social media to email. You can see in this article and video that email is not the way to engage these advisors.

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New Forces Dramatically Impact Financial Advisors

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The Future of the Financial Advisor Cogent Reports

Regardless of the uncertain fate of the DOL fiduciary ruling, one thing is certain: it unleashed new forces that will dramatically impact financial planning and advice for years to come. With many advisory firms and product manufacturers far down the road in adapting their strategies and communicating these changes to clients, it would be shortsighted for firms to fully reverse course now.

We already see advisors changing their business practices. As advisors move further toward fee-based compensation, predominantly fee-based advisors and RIAs are the only advisor segments that are growing. As a result, we’re seeing advisor-controlled assets gradually shifting toward lower-fee investment products. Compounding the challenge for asset managers, advisors are becoming less receptive to traditional wholesaler outreach and are instead seeking more personalized, on-demand support. Continue reading

Ranks of Fee-Based Advisors Expected to Swell

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Despite the uncertain fate of the Department of Labor fiduciary rule, we already see advisors changing their business practices. According to Cogent’s The Future of the Financial Advisor™ report, advisors earning at least three-quarters of their total compensation from asset-based fees could comprise half (49%) of all financial advisors by the end of 2017, up from 38% presently. This shift toward fee-based compensation is primarily being driven by advisors in the National, Regional and Independent channels. Continue reading

Financial Advisors and Investors at Odds Over DOL Fiduciary Ruling

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The future of the DOL fiduciary ruling is anything but certain. We do know, however, that the majority of financial advisors have some concerns about the ruling, with six in ten advisors (60%) favoring repeal. Advisors employed in the broker/dealer channels—particularly the Bank channel (82%)—and commission-based advisors (72%) are most likely to support repeal. In contrast, RIAs, most of whom are predominantly fee-based and already consider themselves fiduciaries, are more likely to oppose repeal (45%) than support it (29%).

Advisors Weigh in on the DOL Fiduciary Rule

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Targeting Fee-Based Advisors

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New forces are converging that could dramatically alter the advisor landscape in the coming years. As the ranks of financial advisors shrink, fee-based advisors represent an expanding segment signaling a trend savvy asset managers should act on. In fact, predominantly fee-based advisors (those earning at least three-quarters of their total compensation from asset-based fees) now comprise four in 10 financial advisors.

This segment of advisors doesn’t just include RIAs (33%), but is equally as likely to include advisors in the Independent (33%) channel with the National channel a close third (29%). Predominantly fee-based advisors represent an attractive target, managing relatively larger books of business ($152 million, on average) compared with just $71 million for commission-based advisors. Furthermore, predominantly fee-based advisors report relatively higher allocations to mutual fund and ETF products. Continue reading

Email Strategy Key to Optimizing Advisor Engagement

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Email Strategy is Key to Engaging Advisors

One of the first things many Americans do after they wake up is check their email, so it is no surprise that emails represent more than half of advisors’ reported monthly touches from financial services providers. Reflecting advisors’ busy schedules, a majority of advisors (56%) say email is the most effective method for financial services providers to communicate with them. This figure represents a significant increase over previous years, at the expense of more personal interactions. Furthermore, email is favored across all types of advisors. Continue reading

Advisors’ Go-to Firms for Thought Leadership

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Thought leadership serves as a leading driver of advisor consideration and loyalty, and is one of the most effective means of getting on a new advisor’s radar. That said, just a handful of firms stand out as go-to providers in this critical category. According to Cogent’s Advisor Engagement™ report, American Funds, First Trust, BlackRock, Jackson National and Fidelity Investments lead in thought-leadership distribution. In Q2 of this year, a majority of advisors said they received/downloaded thought leadership materials from these five firms in the past three months.

In terms of consumption, half of advisors read thought leadership materials from First Trust (51%), followed by 42% from American Funds and 37% from both BlackRock and J.P. Morgan Funds. In addition, First Trust had the greatest proportion of advisors who shared its thought leadership with others (19%), followed by American Funds (10%) and J.P. Morgan Funds (10%). Continue reading

Established ETF Players Outshine New Entrants in Emerging Smart Beta Category

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While historical market leaders iShares and Vanguard continue to top the list in advisor trust, well-known active managers relatively new to the ETF market—including Franklin Templeton, J.P. Morgan and Oppenheimer—rank among the 10 most trusted brands for the first time this year. Meanwhile, Fidelity ranks fifth in brand trust for the second year in a row, indicating there is market opportunity to extend trusted brands into new product categories (see the 10 most trusted ETF providers here).

That said, while these well-known active managers have a lot of potential to build upon their credibility as mutual fund providers, particularly in areas of perceived expertise, these firms still have their work cut out for them to realize their full potential in the ETF category. Continue reading