Advisors uncertain over which fund companies to support, survey finds

(January 21, 2003) Financial advisors aren’t sure what fund companies they will be working with this year, according to a private study conducted for Canada’s mutual fund industry. That uncertainty provides an opportunity for fund companies who understand the difference between attracting advisors and keeping them, says Environics Research Group vice-president Hugh Murphy.

“Advisors are challenged in certain respects and they’re confused about what companies they should be tossing their support behind.” The indecision stems from a number of factors, Murphy explains, including increasingly complex and volatile markets, as well as growing investor knowledge.

“Investors are challenging advisors more than ever to bring value,” Murphy tells Advisor.ca. “So the advisors need to maintain an edge with respect to knowledge, so they’re looking for support from fund companies and wherever they can get it to make sure they have the best available insight.”

That support could include road shows, advisor seminars and training initiatives in conjunction with industry associations, he adds.

Environics found that companies who want to keep advisors selling their funds have to deliver on performance, and not just on the financial side.

The financial performance of a family of funds is tremendously important, but other factors such as a fund’s track record, fund manager quality and investment style also come into play.

On the other hand, companies looking to attract new advisors should be concentrating on developing relationships, Murphy says. “Fund companies have to focus on getting the right wholesalers into the market, and having them offer the right kind of support,” he says. “You’ve got to have good people doing the right things and obviously that’s a huge challenge for any company.”

Murphy points to Franklin Templeton and AIM/Trimark as examples of companies who are doing the right thing with respect to relationship development.

Environics surveys the top financial advisors who sell mutual funds for its annual Advisor Perception Study. More than 1,700 advisors from 14 fund companies participated in the latest study. The results are not made public.

Advisor’s Edge/Advisor.ca also surveyed advisors in its first Annual Dollars & Sense Survey about the fund companies advisors use. Click here for some constructive feedback from advisors on how financial institutions can improve their services.

Which fund companies will you be working with in 2003? Are you satisfied with the support you get from the companies you use? What can they do to make your life better? Share your opinions in the “Mutual Funds and Other Products” forum of the Talvest Town Hall on Advisor.ca.

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca