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Wednesday, August 16, 2023

FAs Lean More On Their Go-To Fund Firms

Reported by Neil Anderson, Managing Editor

FAs are increasingly favoring their go-to fund firms, and that long-term trend is expected to continue for years to come, according to new research from a consulting firm that supports fundsters' marketing and distribution efforts.

Thomas "Neil" Bathon
Fuse Research Network
Founder, Partner
An estimated 44 percent of financial advisors' current assets are their their top three wholesaler relationships, according to survey data in Fuse Research Network's recent Wholesalers: The Advisor View report. That's up over the last five years, as in 2018 an estimated 40 percent of the average FA's assets were with their top three asset manager allies.

"Being among one of the top three relationships with an advisor is the holy grail for wholesaling teams and asset managers since these partnerships provide a disproportionate share of the advisor's book of business," the Fuse team writes. "The right products with competitive performance are table stakes. Since this is out of the hands of the sales team, wholesalers must deliver on what they can control — strong investment knowledge, a solid relationship with the advisor, and access to firm experts."

Looking ahead another five years, the Fuse team projects that in 2018 the average FA will have 47 percent of their assets with their top-three asset manager relationships.

Perhaps such data and predictions underscore another factor (beyond the push for scale and the rise of passive, among others) contributing to continuing industry consolidation; asset managers want to be bigger to be able to have a better shot at winning spots in each FA's top three slots by offering more. And perhaps continuing consolidation is a factor in FAs' intensifying their focus on a few relationships each, as it becomes easier to do all their fund "shopping" with only a few "stores" (fund firms). 

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