In Practice June 9, 2009

Cutting Expenses Last Resort for Advisers

A survey of SEI advisers found that cutting expenses—especially by reducing staff—is a last resort as they attempt to restore firm profitability.
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According to the SEI Advisor Network Quick Poll, “How Are You Restoring Firm’s Revenue,” only 14.9% of the 200 respondents cited expense reduction as their primary strategy for restoring revenue, and only 1% said they are reducing staff.

Instead, advisers are focused on building business through client acquisition efforts, primarily driven by referrals, and developing new alliances with centers of influence, according to SEI. More than half of the poll respondents (51.6%) ranked new client acquisition as their number one strategy for restoring revenues. Additionally, about 24% said establishing formal center of influence relationships was their primary strategy.

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The poll also gathered insights specifically related to client acquisition techniques. When asked what new business development strategies or tactics advisers were using for the first time or had only used minimally before, about 44% stated they were specifically asking clients for referrals. Only a small percentage said they were exploring direct marketing (10.7%) or traditional advertising (5.3%) to increase client acquisition.

In analyzing client acquisition success, about 37% of advisers attributed the success of new client acquisition to service-related issues with their previous adviser. In addition, 18.6% felt that the primary reason their prospects became clients was because they had decided they no longer wanted to manage their investments themselves.

“Given the service-related issues some advisers are facing, they still need to consider how efficient business management can reduce expenses without reducing capacity,” said Stephen Onofrio, senior managing director at SEI Advisor Network, in the release. “Focusing on growth is still the most critical concern, but having a client acquisition ‘process’ that integrates an adviser’s front office with their back office is also key.”

Products June 8, 2009

Natixis Turns Away New Investors from Small-Cap Value Offering

Natixis Global Associates (NGA), the distribution arm of Natixis Global Asset Management, said it will close the Vaughan Nelson Small Cap Value Fund (ticker: NEFJX) to new investors effective July 31.
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The fund was launched on December 31, 1996, and currently has $463 million in assets under management, although Vaughan Nelson Investment Management advises nearly $2.4 billion in this same discipline in total, according to the announcement. The fund will remain open to existing shareholders.

“The best interests of shareholders are central to our decision to close the Vaughan Nelson Small Cap Value Fund to new investors,” said Lee Lahourcade, president and chief executive officer of Vaughan Nelson Investment Management. “Closing the Fund will allow its managers to continue identifying undervalued stocks within the confines of the small-cap universe without creating inefficiencies within the investment management process.”

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Fund Management

The fund invests in a diversified portfolio of small-cap stocks managed with Vaughan Nelson focusing on absolute return objectives. It is co-managed by Chris Wallis and Scott Weber of Vaughan Nelson Investment Management, both of whom were named to the fund in 2004, according to the announcement.

Co-managed by Wallis, Weber and colleague Dennis Alff, the Vaughan Nelson Value Opportunity Fund seeks long-term capital appreciation by focusing on securities the portfolio managers feel are positioned to deliver attractive absolute returns, according to the firm. Launched in October 2008, the Value Opportunity Fund pursues a bottom-up investment strategy focused on identifying undervalued stocks in the market-capitalization range of $1 billion to $20 billion. Vaughan Nelson advises $700 million in this same discipline in total, according to the announcement.

Vaughan Nelson Investment Management was founded in 1970 and is headquartered in Houston, Texas. The firm has approximately $6.0 billion in assets under management (as of March 31, 2009). An affiliate of Natixis Global Asset Management, Vaughan Nelson manages equity, fixed-income, and balanced portfolios for institutions and high-net-worth clients.


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