Cerulli Edge - U.S. Edition Topic: Institutional vs. Retail (Aug 2011)

Countries covered: United States In the August 2011 issue of The Cerulli Edge—U.S. Asset Management Edition, analysts from Cerulli’s retail asset management practice examine three distribution channels that display both retail and institutional characteristics: defined contribution investment only (DCIO), registered investment advisors (RIAs), and variable annuity (VA) subadvisory. In all three cases, there is an institutional-quality screening process being conducted, but ultimately, funds are being managed for individual investors. This month’s Quantitative Insights presents additional data on the RIA, VA subadvisory, and DCIO businesses. Please Note: the instant online delivery is a Global License.

Additional Information

Report Excerpt

The second article examines the independent retail RIA channel. This channel has gained the attention of asset managers as it has been growing in spite of an otherwise stagnating financial advisory industry. Sophisticated advisors are increasingly moving their practices to this independent business model. As illustrated in the exhibit on page one, of the numerous opportunities that display both retail and institutional characteristics, asset managers find independent RIAs to be the most appealing. However, asset managers must understand that traditional retail wholesaling techniques do not work with these advisors. Rather, RIAs are looking for more in-depth content on how asset managers run money.

The final article investigates opportunities in the variable annuity (VA) subadvisory business. The variable insurance industry faces numerous challenges, not the least of which is its choice to engage in product one-upmanship. This shifted the focus of wholesaler-advisor conversations to the details of product features, rather than to ways in which the product can solve client problems. This led to a disproportionate level of gross sales coming from annuity-to-annuity exchanges, rather than new money into the industry. However, there do exist opportunities for asset managers in this space, largely revolving around participating in the asset-allocated options that are required for living benefits.

This month’s Quantitative Insights presents additional data on the RIA, DCIO, and VA subadvisory businesses.

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