Why you should target individuals

by Kathryn Morrison

Kathryn Morrison

Which fast growing channel are asset managers ignoring? 

Individuals.

Speaking on a panel yesterday at MFWire Influencers Summit in Boston, Carolyn Clancy, EVP, Fidelity FundsNet, said she is shocked at how few fund firms market to retail investors.

“Funds get 401Ks and Managed Accounts, but they miss retail,” Clancy said. Aaron Dillon, Director of Mutual Fund Products for TD Ameritrade, said the growing retail market is a game changer, noting that TD Ameritrade is selling billions of dollars in fund assets to individuals.

Currently, more fund assets in funds are sold by intermediaries than purchased directly by individuals. However, that trend is changing. The speakers suggested that marketing to retail may be less expensive than selling to 401K plans or through advisors. They also notedd that more funds are being bought by people doing their own investing.Clancy added that more than 80% of the funds sold on Fidelity FundsNet are sold online.

Older Americans own the majority of assets. These mature investors now need help in making smart investment choices. This trend suggests that education should be a major focus of mutual fund managers. Fidelity, Schwab and TDAmeritrade’s websites offer a full range of information and education to retail investors; web-based education can be an efficient, scalable tool. However, most fund companies have lagged in educating both their advisors and retail customers. 

Dillon recommended that every fund group dedicate part of its website to managers talking about their strategies.  He and Clancy agreed that the website should offer 2-5 minute videos of each manager talking about the stock selection process, what the portfolio looks like and more.  Webinars and presentations should be posted on the website for use by individuals, advisors and the news media. 

Education plays a critical role for advisors as well. The advisor market remains large and important with an over-proliferation of products, many of which are new. To keep up, funds need to do a better job of educating advisors who are being inundated with new products and help them navigate complex asset classes.