Using Market Insights and Sales Data to Optimize Your Distribution Strategy

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Using Market Insights and Sales Data to Optimize Your Distribution Strategy

  1. 1. Using Market Insights and Sales Data To OptimizeUsing Market Insights and Sales Data To Optimize Your Distribution StrategyYour Distribution Strategygygy Dan Cwenar President and General Manager Access Data, a Broadridge Company October 29, 2013
  2. 2. TodayToday • Product Distribution Today• Product Distribution Today • Industry trends and challenges • Components of a data-driven solution • Data Insights • Case Study 1: Distribution Channel Trends • Case Study 2: “Alternative Products” Distribution Trends • Conclusions 2
  3. 3. Significant expectation aboutSignificant expectation about datadata 3
  4. 4. Our path and perspectiveOur path and perspective • We provide enterprise data management and business• We provide enterprise data management and business solutions supporting investment product distribution • 1997: founded • 2000: first SalesVision client • 2009: a Broadridge Company • Today: • +125 manufacturers and distributors as clients• +125 manufacturers and distributors as clients • Data and business solutions covering 90% of all long-term fund assets and 95% of all ETF assets 4
  5. 5. Product distribution is complex andProduct distribution is complex and dynamicdynamic11 Manufacturers distribute products via intermediaries to investors 92.4 million Investors 290 million accounts, 54 million households 38,160 Sales & Distribution Professionals 2 million Professionals, 60,000 Firms 16,380 Products 776 Fund Sponsors, $14.7 Trillion AUM Manufacturers distribute products directly to investors 5 1. Data based on 2013 ICI Fact Book and Broadridge proprietary research
  6. 6. Industry trends create unique data challengesIndustry trends create unique data challenges Typical Data Exchange Intermediary 1 Intermediary 2 Mfg 1 Mfg 2 Typical Data Exchange Process y Intermediary 3 Intermediary 4 Intermediary 5 g Mfg 3 Mfg 4 Mfg 5 • Omnibus accounting  less transparency Intermediary 5 Intermediary n Mfg 5 Mfg n • New products  create data challenges (e.g., alternatives and ETFs) • Sales channel dynamics  increased need for better data (e.g., RIA and Banks) • Regulatory environment  fee scrutiny, held away assets, controls 6 Regulatory environment  fee scrutiny, held away assets, controls • Lack of data exchange standards  poor data quality and management
  7. 7. Components of a solution frameworkComponents of a solution framework Manage data once  use it across the enterprise Sales Wholesaler Distributor 22c 2 Grow Revenue Manage Fund Expense CRM Market Tax Manage Fund Risk Manage data once  use it across the enterprise Reporting Compensation Compensation 22c-2 CSO, CMO, COO CFO CCO Integration Intelligence Tax Data Aggregation and Business Rules Data Enhancement and Research Asset Positions and Transactions + Context 7 Intermediary 1 Intermediary 2 Intermediary 3 Intermediary n Reference Data
  8. 8. DataData artifactsartifacts relatedrelated to distributionto distribution Manufacturer (e.g., Dreyfus, Russell, American Century, SSgA) Intermediary (e.g., Morgan Stanley, Schwab, TD Ameritrade) InvestorExternal Wholesaler Internal Wholesaler Territory assignmentsProduct details DBRs Location• Territory assignments • Channel designations • LOB definitions • Sales activities • Product details • Compliance rules • Selling agreement terms • Sales compensation terms • Industry data • DBRs • FOPs • Transactions • Asset positions • Invoice details • Location • Demographics Intersection of disparate data sets Intersection of disparate data sets 8 [Rep Information] [Product Information] [Retirement Plan Information]
  9. 9. Case Study 1: Distribution Channel Trends Traditional versus emerging channels
  10. 10. Data insights: roadmap for driving growthData insights: roadmap for driving growth Traditional Distribution Emerging Distribution Wirehouse Registered In estment Ad isors New Brokerage Firms Independent and Regional B/Ds Investment Advisors Bank Channel — Multi Dimensional information for strategic decision makingRegional B/Ds making 10
  11. 11. Characteristics of traditional channelsCharacteristics of traditional channels Wirehouse Independent / Regional Examples Merrill Lynch, Morgan Stanley, Wells Fargo, UBS • Self clearing: LPL, Raymond James, RBC, Edward Jones • Via clearing platform: Pershing, National Financial • Other: Regional B/Ds AUM ~$5 trillion ~$2.5 trillion Advisors 57,000 125,000 11 Source: Aite Group Research Report, Tiburon Research and Analysis, June 2013
  12. 12. Characteristics of emerging channelsCharacteristics of emerging channels RIA Bank Examples Moneta Group, Plante Moran, GenSpring Family Offices, Hall • Private Banks: JPM, Mellon Private Wealth • National Banks: Wells, Bank of America Capital Partners , • Trust Companies: SEI, State Street AUM ~$2.5 trillion • Private Banks: ~$1.5 trillion • National Banks: ~$4 trillion• National Banks: ~$4 trillion • Trust Companies: ~$1 trillion Firms 15,000 • Private Banks: 24 (881 offices) N ti l B k 870• National Banks: 870 • Trust Companies: 163 Advisors 55,000 125,000 12 Source: Aite Group Research Report, Tiburon Research and Analysis, June 2013
  13. 13. Emerging channels outpacing traditional channelsEmerging channels outpacing traditional channels ETF Assets by $512 $581 $634 ETF Distribution ETF Assets by Channel: • Banks have twice the ETF assets of any $301 other channel • RIA channel has second largest total of ETF assets $222 $239 $215 $245 $259 $274$261 $268 $301 • RIA channel leads all channels with net flows of $7B into ETFs in Q2’13 Wirehouse Independent B/D RIA Bank Combined 13 Q2 13 p ETF AUM Q2 2012 ETF AUM Q4 2012 ETF AUM Q2 2013 Source: Access Data, a Broadridge Company, June 2013
  14. 14. Mutual Fund vs. ETF usage by channelMutual Fund vs. ETF usage by channel Asset market share % 87% 81% 81% 74% 73% Asset market share % by channel as of April 2013: • Stock and Bond Funds 65% 61% 39% versus ETFs 13% 19% 19% 26% 27% 35% 39% Indep/Reg'l BD RIA Wirehouse Bank Discount Private Bank Trust Co. 14 Mutual Funds ETFs Source: Access Data, a Broadridge Company, June 2013
  15. 15. Mutual Fund vs. ETF usageMutual Fund vs. ETF usage –– core US equitycore US equity Core US Equity: 40% 45% 35%Core US Equity: • ETF assets as percent of combined Mutual Fund and ETF assets 33% 24% 23% 35% 25% 25% [ ETF / (ETF + Mutual Fund) ] 15% 16% Private Bank Bank & Trust RIA Wirehouse Indep/Reg'l BD 15 p g April 2012 April 2013 Source: Simfund Pro, 7.0 / Access Data, a Broadridge Company / Morningstar Categories
  16. 16. Mutual Fund vs. ETF usageMutual Fund vs. ETF usage –– Taxable BondTaxable Bond Taxable Bond: 15% 16% 13% 16% 15% 14% Taxable Bond: • ETF assets as percent of combined Mutual Fund and ETF assets 12% 10% 12% 10% [ ETF / (ETF + Mutual Fund) ] Private Bank Wirehouse Bank & Trust RIA Indep/Reg'l BD 16 p g April 2012 April 2013 Source: Simfund Pro, 7.0 / Access Data, a Broadridge Company
  17. 17. Active management still dominant withActive management still dominant with RIAsRIAs RIA T t l A t ($B) b F d T M h 2013RIA Total Assets ($B) by Fund Type – March 2013 Active MF vs. Index MF vs. ETF US Equity Int'l / Global Equity Balanced / Allocation Alternative Taxable Bond Municipal Bond 17 Equity Allocation Active Mutual Funds Index Mutual Funds ETF Source: Simfund Pro, 7.0 / Access Data, a Broadridge Company
  18. 18. Case Study 2: Alternative Products Distribution Trends Select product categories including: Nontraditional Bond, Long Short Equity, Market Neutral
  19. 19. Select Liquid Alternative categoriesSelect Liquid Alternative categories Long/Short Equity 29%Nontraditional Bond Market Neutral 7% 64% Liquid Alternatives Category AUM as of 7/31/13 # of Products Percent Nontraditional Bond $84,901,643,509 166 64% Long/Short Equity $38,774,922,866 72 29% Market Neutral $8,702,104,237 125 7% 19 Source: Access Data, a Broadridge Company Select categories: $132 billion AUM
  20. 20. AUMAUM rankings: Liquid Alternative Fundsrankings: Liquid Alternative Funds Rank Management Compan AUMRank Management Company AUM 1 PIMCO $25,444,037,814 2 JPMorgan $20,337,360,281 $3 MainStay $12,214,381,242 4 BlackRock $10,378,879,389 5 Natixis Funds $9,802,630,852 6 Eaton Vance $9,274,324,933 7 Goldman Sachs $6,328,383,507 8 FPA $4,928,305,633 9 AQR Funds $2,890,286,933 10 Calamos $2,868,281,789 20 Source: Access Data, a Broadridge Company / Morningstar Categories Top 10 manage $104 billion in AUM
  21. 21. AUMAUM growth by categorygrowth by category $70 $50 $60 $70 $40 $50 $Billions $20 $30 In$ $0 $10 12/31/2012 1/31/2013 2/28/2013 4/30/2013 7/31/2013 21 Market Neutral 65% Long/Short Equity 89% Nontraditional Bond 51% Source: Access Data, a Broadridge Company
  22. 22. Channel segmentation of longChannel segmentation of long--short equityshort equity July 2013 Independent Fastest Growing Segment Bank 24% Private Bank 10% Trust 6% Retirement 0% July 2013 $4.27 $4.0 $4.5 In $ Billions Independent Fastest Growing Segment Dual Registered 18% Wirehouse 13% RIA 11% $3.33 $3.21 $2 29 $2.5 $3.0 $3.5 Independent 18% L t G i S t $1.76 $2.01 $1 05 $2.29 $1 0 $1.5 $2.0 Largest Growing Segments January ‘12 – July ‘13 Firm Type Growth Independent 145% $0.02 $1.05 $0.0 $0.5 $1.0 22 Trust Company 135% Wirehouse 118% Source: Access Data, a Broadridge Company
  23. 23. Channel segmentation ofChannel segmentation of market neutralmarket neutral July 2013 Independent Fastest Growing Segment Bank Dual Registered 6% Private Bank 5% Trust 2% July 2013 $1,194 $1,200 $1,400 Independent Fastest Growing Segment In $ Millions Independent 41% RIA 13% Bank 11% $800 $1,000 Wirehouse 22% $652 $362 $304 $400 $600 L t G i S t $304 $185 $152 $59 $0 $200 Largest Growing Segments January ‘12 – July ‘13 Firm Type Growth Independent 178% 23 Source: Access Data, a Broadridge Company Private Bank 76% RIA 38%
  24. 24. Channel segmentation of nontraditional bondChannel segmentation of nontraditional bond July 2013 Independent Fastest Growing Segment Private Bank Bank 8% Dual Registered 8% Trust 1% Retirement 0% July 2013 $12.97 $12 $14 In $ Billions Independent Fastest Growing Segment 27% Wirehouse 20% RIA 18% $9.79 $8.82 $8.47$8 $10 20% Independent 18% L t G i S t $3.92 $3 55 $4 $6 Largest Growing Segments January ‘12 – July ‘13 Firm Type Growth Independent 80% $3.55 $0.61 $0.11$0 $2 24 Dual Registered 76% Trust Company 57% Source: Access Data, a Broadridge Company
  25. 25. ConclusionsConclusions • Data management program is essential• Data management program is essential • Data live everywhere • Data change daily • New products, new channels, new competitors • “Data insights” support: • Territory management • Competitor analysis (region, product, and channel) • Compensation plans and management • Target your investments • Measure results / modify approach • New product development (e.g., alternatives, ETFs) 25 p p ( g , , )
  26. 26. Thank YouThank Youa oua ou

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