MutualFundWire.com: A 1,000-FA B-D Preps a New Advisory Product

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Wednesday, October 31, 2018

A 1,000-FA B-D Preps a New Advisory Product

The team at a broker-dealer with more than 1,000 financial advisors is prepping a new advisory product for next year. Both ETFs and traditional mutual funds will be available through the new program.

Shawn Michael Mihal
Waddell & Reed, Inc.
President

"We intend to continue to offer more investment choices through strategic relationships with unaffiliated manufacturers," Shawn Mihal, president of retail B-D Waddell & Reed, Inc., told analysts yesterday morning on the Q3 2018 earnings call (transcribed by Seeking Alpha) for the B-D's parent, Waddell & Reed Financial, Inc..

Waddell & Reed, Inc. now has 1,074 FAs and 351 advisor associates as of September 30, Mihal said.

Amy Jo Scupham
Ivy Distributors, Inc.
President

"This new advisory product will offer multiple investment portfolios consisting of both mutual fund-based portfolios, as well as ETF-based portfolios from three separate unaffiliated institutional managers," Mihal said. "The product will provide additional options for advisors seeking to outsource asset allocation. We're offering a choice of strategic, dynamic and tactical investment management, thus allowing advisors to spend more time focusing on client relationships."

The news comes after the B-D launched a different advisory product in May 2017. That product now has $4 billion in assets, as of September 30, 2018, Mihal said.

Waddell & Reed, Inc. FAs still tend to mostly use mutual funds from their sister asset manager, Ivy. But Mihal expects that to shift a bit.

"The overall ratio of affiliated funds [i.e. Ivy] to non-affiliated funds has remained relatively consistent and about 75 percent in affiliated funds," Mihal said in response to a question from KBW analyst Robert Lee. "But with the continued expansion of those [advisory] products, we do expect to see some diminishment of that overall ratio of affiliated funds to unaffiliated funds as the growth continues, as we broaden out the exposure to unaffiliated funds."

Later in the call, Amy Scupham, president of Ivy Distributors, hinted at a new product series.

"We're currently working on launching a series of model delivery portfolios that I think will be very, very beneficial especially in our broker-dealer channel [i.e. through Waddell & Reed, Inc. FAs] as it relates to the way that clients are currently consuming long-only equity strategies in that channel," Scupham said, responding to a question from Kenneth Lee, analyst at RBC Capital Markets.

(Our sister publication, 401kWire, digs into DC I-O news from the call.)

Yesterday Overland Park, Kansas-based Waddell & Reed Financial reported Q3 2018 net income per share of $0.58 and revenue of $295.1 million, beating expectations by $0.02 and $1.74 million, respectively. AUM rose one percent in the quarter (but fell two percent year-over-year) to $79.5 billion on September 30, 2018.

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