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Financial Advisory Models Fragment In U.S. Fund Market; Money Managers Scramble To Catch Up: Casey Quirk

  (May 19, 2014)

DARIEN, Conn., May 19, 2014 /PRNewswire/ --As commission-based financial advisory practices are in retreat giving way to fee-based models and a heightened emphasis on client outcomes, emerging archetypes increasingly employed by financial advisors threaten the hold a select group of brand-name money managers have had in selling their funds in the U.S. retail market, according to a new whitepaper from Casey, Quirk & Associates LLC, a leading management consultant to the global asset management industry.

In the past decade, four advisor archetypes emerged to challenge the legacy manager selector model in which advisors would invest their clients' assets mostly through a select group of brand-name fund firms. The four newer models which Casey Quirk identifies as portfolio managers, passive allocators, multi-asset-class solution (MACS) outsourcers, and home office outsourcers now control 66% of the assets managed by advisors and are reshaping the U.S. retail fund market. Through 2017, those models will capture a 71% market share, at the expense of the legacy archetype, which will decline to 24% of the advisor-sold assets, from 33% today and 79% in 2003, according to Casey Quirk.

The stakes are high for money managers, as the U.S. intermediary market consisting of 300,000 financial advisors drives approximately 28% of total global asset management industry revenue, according to the Casey Quirk whitepaper, Re-Tooling U.S. Intermediary Sales: New Advisor Targeting Strategies. The Casey Quirk whitepaper is based on the firm's ongoing surveys of financial advisors and supported by the world's largest proprietary database of asset managers and buyers of investment services.


Many money managers have yet to embrace this new world of fee-based compensation and outcome-oriented investing in both their product development and approach to client relationships, said Jeffrey Levi, a director at Casey Quirk and one of the authors of the whitepaper.

"Managers concentrating their efforts on what we call legacy manager selectors are competing for a shrinking pool of assets, while ineffectively covering the advisors with the growing asset base and, crucially, the source of net new fund flows," Levi said.

"With financial advisors shifting away from the 'one-size-fits all' strategy, asset managers have a tremendous opportunity to take market share," said Justin White, also a co-author of the paper and a director at Casey Quirk. "The winning manager strategies will be those targeting advisor groups with skills in specific areas, and reshaping their sales and marketing efforts accordingly.''

Of the four new advisor models described below in greater detail, the fastest growing over the next three years will be portfolio managers and MACS outsourcers:

  • Portfolio managers seek best-of-breed product across a wide range of asset classes and assume investment responsibilities at the practice level
  • MACS outsourcers use a core-satellite approach, with multi-asset class solutions as core, and additional managers tactically
  • Home office outsourcers are the advisors primarily using their firms' packaged portfolios and advice
  • Passive allocators focus on asset allocation and use index funds and ETFs

While the appetite for asset strategies will vary widely depending on the advisor model, Casey Quirk's global demand model forecasts that new fund flows will favor MACS, liquid alternatives and unconstrained fixed income through 2018, with U.S. equities suffering outflows.

To obtain the full Casey Quirk whitepaper, please go to the firm's website, www.caseyquirk.com.

About Casey, Quirk & Associates LLC

Casey Quirk is a management consultant that focuses solely on advising investment management firms. Casey Quirk's work with senior leadership teams includes broad business strategy reviews, investment positioning and strategy, market opportunity evaluations, organizational design, ownership and incentive structuring, and transaction due diligence. In the past five years, Casey Quirk has advised a majority of the 50 largest investment management organizations worldwide. For more information please visit www.caseyquirk.com.

SOURCE Casey, Quirk & Associates LLC

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