NAVCAP™NAV Capital Partners, LLC<br />Intelligent Distribution™<br />
NAVCAP™ Competitive Advantage<br /><ul><li>Outsourced  Distribution
Variable Cost vs. Fixed Cost
Salaries, Expense Management, Supervision, Licensing and Compliance, and Performance Tracking
Talent Retention, Compensation, and T&E Management managed by NAVCAP
Core Competencies
Asset Management vs. Third Party Distribution (sales, marketing, and distribution)
Focus on Core Strengths (asset mgmt) and Execute at the Margin vs. sales, marketing, and distribution
Talent
Captive Cost Model (fixed) vs. NAVCAP™ High Value Differentiator (variable)
Experience, Industry Knowledge, Platform and Product Knowledge by Firm; Consults, MLPA, PIA, Pace, MFA, UMA, MAC, CG, etc.
Deep Relationships with Financial Advisors, Key Accounts, Home Office Personnel, and other intermediaries
Domain expertise, history of performance, demonstrated track records
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Navcap = Intelligent Distribution

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Navcap = Intelligent Distribution

  1. 1. NAVCAP™NAV Capital Partners, LLC<br />Intelligent Distribution™<br />
  2. 2. NAVCAP™ Competitive Advantage<br /><ul><li>Outsourced Distribution
  3. 3. Variable Cost vs. Fixed Cost
  4. 4. Salaries, Expense Management, Supervision, Licensing and Compliance, and Performance Tracking
  5. 5. Talent Retention, Compensation, and T&E Management managed by NAVCAP
  6. 6. Core Competencies
  7. 7. Asset Management vs. Third Party Distribution (sales, marketing, and distribution)
  8. 8. Focus on Core Strengths (asset mgmt) and Execute at the Margin vs. sales, marketing, and distribution
  9. 9. Talent
  10. 10. Captive Cost Model (fixed) vs. NAVCAP™ High Value Differentiator (variable)
  11. 11. Experience, Industry Knowledge, Platform and Product Knowledge by Firm; Consults, MLPA, PIA, Pace, MFA, UMA, MAC, CG, etc.
  12. 12. Deep Relationships with Financial Advisors, Key Accounts, Home Office Personnel, and other intermediaries
  13. 13. Domain expertise, history of performance, demonstrated track records
  14. 14. Initially 10-12 Experienced Specialists focused on Wirehouses and Regional Broker Dealers
  15. 15. Results
  16. 16. NAVCAP® - NAV Capital Partners is only compensated for results
  17. 17. Distribution cost is based on a percentage of advisory management fee (we get paid when and only when we deliver assets)</li></li></ul><li>Where’s the business?<br />
  18. 18. Wealth Management Landscape Consolidation<br />Assets: $2trn<br />FAs: 20,000<br />=<br />+<br />Assets: $1.4trn<br />FAs: 16,000<br />+<br />=<br />Assets: $1.7trn<br />FAs: 21,600<br />=<br />+<br />The brokerage/wealth management landscape is undergoing seismic change<br />
  19. 19. Shifts in distribution<br />Source: Strategic Insight Simfund, Empirical Research Partners<br />*Wirehouse brokers include financial brokers at Merrill Lynch, Smith Barney, Wachovia, Morgan Stanley & UBS<br />
  20. 20. The top five states hold 41.56% of total opportunity<br />Adding the next five captures 61.43%<br />The top half of states yields 88.47%<br />The other twenty six produce 11.53% of flows<br />Defining Priority Segments<br />
  21. 21. Defining Priority Segments<br />
  22. 22. Institutional clients shifting gears<br />Survey of Pension Consultants<br />Source: Eager, Davis & Holmes Survey, Empirical Research Partners<br />
  23. 23. Industry Changes<br /> Industry changes have permanently altered asset management distribution. The effects of the latest crisis will be structural. Four main drivers have created an inflection point:<br />Shift in economics away from the manufacturer <br />Less rich revenue mix<br />Rapidly falling return on the cost of sales<br />Resurgence of boutique money managers <br />The shift in economics away from the asset manager will dramatically change their view of fixed distribution costs.<br />The confluence of merging platforms (UMA), share class acceptance/conversion, and downward pressure on fees in general continue to negatively affect average fee rates and margins. Even if the S+P remained at record levels, the actual fee income would remain dramatically reduced.<br />
  24. 24. Industry Changes<br />Dynamic landscape requires flexibility <br /><ul><li>Consolidation continues both product manufacturers and distributors
  25. 25. Variable cost model preferable
  26. 26. Distribution model should be extremely focused on opportunity not geography
  27. 27. Advancing technology creates opportunity for “Boutiques”
  28. 28. Major shift toward advisory platforms
  29. 29. Unified Managed Accounts</li></ul>Shift to low-cost beta continues<br /><ul><li>Demand for low volatility and absolute return products is increasing
  30. 30. Increasing appetite for outcome or solution driven product development
  31. 31. Significant opportunity for absolute return product in mutual fund package</li></li></ul><li>Industry Changes<br />The shift in economics away from the asset manager will dramatically change their view of fixed distribution costs.<br /> The confluence of merging platforms (UMA), share class acceptance/conversion, and downward pressure on fees in general continue to negatively affect average fee rates and margins. Even if the S+P remained at record levels, the actual fee income would remain dramatically reduced.<br />Less rich revenue stream<br /> Platform consolidation continues to drive effective fee rates lower. Load waived A shares are being converted and replaced by lower fee institutional shares in the best case. SMA model delivery is in most cases now less than 40 basis points in a slightly worse scenario. Also, customers will no longer pay high fees for beta. The race to be the low cost provider of beta continues. Revenue sharing is increasingly asset-based, further contributing to declining margins. <br />Rapidly falling return on cost of sales<br /> The cost of a dollar of revenue continues to grow (approximately 13%/year 2006-2009). Shrinking existing coverage models and wholesaler compensation is not keeping pace with declining revenue. The costs of both starting and shrinking a sales force are considerable. The cost of no sales with fixed distribution costs is unbearable.<br />
  32. 32. NAVCAP™ = Intelligent Distribution™<br />NAVCAP Specialists<br />(outsourced)<br />Variable cost, aligned<br />Turn-key Solution<br />Strong pedigree<br />Demonstrated performance<br />Existing relationships<br />Highly skilled<br />Results driven<br />Easy to add/delete<br />Key accounts<br />NAVCAP is an owner operator model geared for longevity<br />Captive Wholesalers (internal)<br />Fixed cost, unaligned<br />T&E funding and oversight/accounting<br />Travel and expense budgets are not aligned with ownership<br />Benefits<br />Training, supervision, HR, registration, licensing<br />Distraction from core competency<br />Difficult to build/delete<br />Costly turnover<br />
  33. 33. NAVCAP™<br />

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