Products May 26, 2010

Forward Management Rebrands Accessor Funds

Forward Management, LLC, has announced that Accessor Funds are now the Forward Funds.
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The rebranding of Accessor Funds comes after the June 2008 announcement of the Forward agreement to acquire Seattle-based Accessor Funds (see “Forward Management Picks Up Investment Adviser”). The Accessor Funds expanded Forward’s fund offerings in asset allocation strategies, as well as in alternatives strategies with the Strategic Alternatives Fund and Frontier Markets Fund, which was launched after the acquisition.

Because Accessor was one of the providers of investment strategies to bank trust departments, the acquisition has opened that distribution channel to all Forward Funds.

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In addition, the Accessor acquisition, combined with the acquisition in August of 2008 of the San Francisco-based retail division of Berkeley Capital Management, LLC, established internal asset management capabilities at Forward and further expanded its separately managed accounts operation, the company said.

The Accessor rebranding completes the transition associated with Forward’s merger and acquisition activity begun in 2008, resulting in an expanded family of 32 funds unified under the Forward name, and accounting for more than $5.6 billion in assets under management. Forward said the main goal of its acquisitions was supplementing its core plus satellite fund lineup with alternative strategies, and it now includes seven actively managed alternative strategy funds designed for both retail and institutional investors.

In Practice May 26, 2010

Study: 20% of Wirehouse Brokers Will Leave Firms in Next 18 Months

About one in 10 brokers reported that they are very unsatisfied with their firms, according to a new survey.
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A study by Aite Group of wirehouse advisers and other brokers found a continued appetite among some brokers to “break away” from their firms, even though it has been lessened by retention packages. Average wirehouse brokers ranked their chance for breaking away at slightly less than 30%, while the average financial adviser at a captive brokerage firm gives it a 23% chance, according to the survey. 

Aite noted that the accepted peak of breakaway activities occurred at the end of 2008 and early 2009 during the restructuring of wirehouse firms. The big four wirehouse firms (Bank of America Merrill Lynch, Morgan Stanley Smith Barney, Wells Fargo Advisors, and UBS) saw their combined broker headcount drop by more than 7,000 in 2009, according to the report.

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Wirehouses should expect to see more movement, the study suggested. One in four surveyed wirehouse brokers remain either “unsatisfied” or “very unsatisfied” with their employer. The survey found 20% of wirehouse advisers (or 11,000 brokers) will more likely than not break away within the next 18 months. Wirehouses can only count on 15% of brokers as having no appetite to breakaway, compared to 38% at other brokerage firms.

“While retention packages have greatly reduced brokers’ desire to break away, wirehouses are not yet completely free from worry,” said Alois Pirker, research director with Aite Group and author of this report, in a news release. “Top performers that remain dissatisfied could easily choose to defect, especially as rivals continue to offer unprecedented sign-on bonuses for top talent. Across lower-tier producers (brokers that haven’t been ‘locked in’), wirehouses should prepare to see a continuation of intense breakaway activity.”

Money, reputation, and uncertainty are big drivers for brokers to seek a new firm. Looking for a higher payout is the primary motivation for the largest number of surveyed wirehouse brokers (23%). Other motivations for breaking away include not getting a retention package (19%) and the damaged brand of their firm (16%). Brokers outside of the wirehouse channel list uncertainty at their current employer as their top motivation (33%), followed by getting a higher payout (27%). 

When they do break away, many wirehouse advisers are confident they would take most of their books of business with them. Average potential wirehouse breakaways said they could take half of their book of business to a new firm, and more than one-third believe they can retain 75% of their book, according to the study.

If brokers do decide to breakaway, going to a wirehouse is still the most popular option. About one-third of potential wirehouse breakaways and other brokerage firms would opt for a wirehouse firm.  The independent sector is the second most popular destination for wirehouse brokers (26%) and the third most popular for other brokers (24%). Brokers outside of the wirehouse channel show a strong interest in the private bank or family office channels (33%).

The report is based on an Aite Group survey of 159 financial advisers conducted in the fourth quarter of 2009 and included brokers at wirehouse firms (42%); brokers at other self-clearing firms, such as RBC Wealth Management (30%); and brokers at fully disclosed broker/dealer firms (28%).

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