Advisers not Generally Loyal to Providers

Fewer than one third of all financial services firms providing products across five investment categories enjoy positive loyalty ratings among advisers who sell their products, according to a study conducted by Cogent Research.

Using a Net Promoter Score (NPS), a management tool used to gauge the strength of a firm’s customer relationships, Cogent said, The Advisor Product Forecast measured adviser loyalty to specific firms across several product categories: open-end mutual funds, variable annuities, SMAs, ETFs, and closed-end funds.

The research found that ETFs are the only category where providers have consistently high positive loyalty scores (NPS of +19% on average, meaning promoters outstrip detractors by a significant margin). Contrarily, variable annuity and closed-end fund providers receive the lowest average loyalty scores (at -14% and -16%, respectively). Among 17 variable annuity providers measured, only three manage to garner loyalty scores in positive territory.

Only one in four open-end mutual fund companies measured have more promoters than detractors among advisers currently selling their products. The overall average loyalty score for the category was -5%. SMA (separately managed account) providers fare somewhat better, with promoters outpacing detractors by +4% on average.

“Companies can no longer afford to think of loyalty as a “soft’ metric,’ said Bruce Harrington, managing director of syndicated research for Cogent Research, in a press release. “Our study projects through 2009 flat or negative growth for mutual fund and variable annuity sales, trends that are clearly reflected in these current loyalty scores.’

The mutual fund providers that enjoyed a positive NPS were:

  • American Funds,
  • Russell,
  • Franklin Templeton,
  • Dodge & Cox Funds,
  • The Hartford,
  • Davis Funds,
  • Oppenheimer Funds, and
  • Natixis Funds.

The variable annuity providers that received a positive NPS were Ameriprise Financial, Lincoln National, and John Hancock.

NFJ Investments (Allianz, Inc.) earned the top adviser loyalty spot among SMA providers, ahead of Goldman Sachs Asset Management and Davis Selected Advisors, which tied for second.

iShares ranked number one in adviser loyalty among ETF providers, and WisdomTree also showed strong adviser loyalty.

More research from Cogent can be found at