Below is a look at some changes major distributors have made to their platforms this month that may have flown under your radar, collected from Distributor Profiles, a service of sister publications Ignites and FundFire.
Morgan Stanley Dead Set on Deepening Retirement Market Reach
Morgan Stanley acquired the $28 billion institutional investment consultant firm Hyas Group in 2021 and the $72 billion Cook Street Consulting in March 2022, both of which specialize in retirement services.
“We’re still out there talking to many others because it’s a ripe opportunity for roll-ups,” said Andy Saperstein, head of Morgan Stanley Wealth Management.
“And if you think about that underlying opportunity, those two institutional consultants that we bought alone represent hundreds of thousands of relationships that now we’re starting to deepen,” Saperstein added.
The firm is also actively recruiting advisors into its institutional consulting platform, Graystone Consulting, including wirehouse teams from outside the firm and within Morgan Stanley, said Jeremy France, head of Graystone Consulting.
Graystone provides strategic investment services to 3,200 institutional clients, including pensions, foundations, endowments, family offices, Taft-Hartley, and 401(k) plans.
As of the first quarter, Graystone Consulting managed $457 billion, a 12% year-over-year increase, according to a spokesperson.
Graystone has more than 60 offices across the United States, with 61 teams and 258 institutional consultants offering nearly 3,000 investment strategies. The platform does not offer proprietary Morgan Stanley products.
Ameriprise Rakes in $357 Million Through Product Partnerships
Ameriprise‘s earnings from its revenue sharing grew 26.4% in 2021, according to a recent firm disclosure.
The broker-dealer collected a total of $357.4 million in cost-reimbursement payments from 33 product provider partners last year, up from $282.8 million in 2020, the disclosure said.
The top 10 payers in 2021, according to filings are:
- Columbia Threadneedle (an Ameriprise subsidiary)
- MFS
- Fidelity
- BlackRock
- JPMorgan
- Invesco
- PGIM Investments
- Lord Abbett
- Eaton Vance
- Allspring (the rebooted Wells Fargo fund family line)
Overall, there are 30 full participation firms, according to the disclosure. Full participation firms pay an asset-based fee of as much as 20 basis points per year for mutual funds, higher than other partners.
About 27 fund firms also on the 2020 list boosted their payments to Ameriprise in 2021, the filings show.
In addition, Ameriprise’s payments from 529 college savings plan providers rose to $5.9 million in 2021, from $5.1 million the previous year, according to the filing. The firm collects 18.5 basis points annually from plan providers.
As of 2022, there are 20 participating 529 sponsors, 16 of which are full participation firms.
JPMorgan Chops Fixed Income Fund Fees
JPMorgan announced plans to reduce fees on several funds starting November 1.
In all, the changes affect 48 share classes among 10 funds, regulatory filings show.
The firm will lower expense caps on A, C, and I shares across each of the strategies by at least three basis points, the filings show. In addition, the firm will boost waivers on the products by three basis points or more, according to FA-IQ sister publication Ignites.
The 10 funds are:
Income funds
- JPMorgan Government Bond Fund ($2.1B)
- JPMorgan Emerging Markets Debt Fund ($723M)
Municipal Bond Funds
- JPMorgan California Tax Free Bond Fund ($350M)
- JPMorgan New York Tax Free Bond Fund ($341M)
Tax Aware Fund
- JPMorgan Tax Aware Real Return Fund ($577M)
Specialty Fund
- JPMorgan Opportunistic Equity Long/Short Fund ($536M)
U.S. Equity Funds
- JPMorgan U.S. Large Cap Core Plus Fund ($1.8B)
- JPMorgan U.S. Small Company Fund ($955M)
- JPMorgan Small Cap Value Fund ($1.4B)
- JPMorgan SMID Cap Equity Fund ($339M)
Asset data as of July 21, 2022, from JPMorgan and Morningstar Direct.
There are 18 class R shares targeting retirement accounts that will be affected by the change, 16 of which saw their expense caps lowered by five basis points.
Managers to Home Advisors: We Still Make Models, Too
Asset managers are looking for ways to augment their model portfolio offerings and stand out in a crowded market, as reported by FA-IQ sister publication FundFire.
That’s especially true as managers continue to compete against broker-dealer home office research groups to piece together allocations that grab advisors’ attention.
Many firms say that they are seeing demand for customization and tax management capabilities that separately managed accounts can add, according to Matt Apkarian, a senior analyst at Cerulli Associates.
Advisors are looking beyond performance, which means model portfolios that come in flavors including target-risk, outcome-oriented, or investment objective completion approaches. Such strategies can be significantly differentiated, whether they’re offering tax-aware strategies or environmental, social, and governance-focused strategies, according to Apkarian.
As of the end of 2021, the top 10 providers of asset allocation model portfolios, in order of assets, according to Cerulli, were: Edward Jones, Bank of America/Merrill, Morgan Stanley, Wells Fargo, JPMorgan Chase, UBS, LPL Financial, Raymond James, BlackRock and Ameriprise Financial.
Edward Jones ranked as the highest model portfolio provider at $258.2 billion in client money, followed by BofA/Merrill with $184.5 billion and Morgan Stanley at $155.1 billion. Ameriprise ranked tenth with $65.5 billion.
In a reversal from even 10 years ago, broker-dealers dominated the asset allocation model portfolio space, with BlackRock as the only asset manager to crack the list of top providers, as reported by FundFire.
Managers that differentiate their model portfolios with underlying offerings beyond mutual and exchange-traded funds can tap into more distribution opportunities, according to Cerulli. Working with home offices to boost model adoption among advisors, as well as in the turnkey asset management program, or TAMP, channel are the best bets to grab market share, the industry consultant says.
In a climate of high interest rates, rising inflation and economic woes, tax-loss harvesting and being able to offset tax liability are two forces that create much more demand for SMAs, according to Marina Gross, co-head of Natixis Investment Manager’s solutions group.
In addition, the use of fractional share trading is also helping make SMAs more accessible, with minimums as low as $2,000, Apkarian said.
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Source: financialadvisoriq.com
