In Practice February 14, 2007

Industry Must Change to Accommodate Marketplace

In the retirement income arena, the best products won’t necessarily prevail.
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However, those that are superior in delivery will, said David Macchia, president and chief executive of Wealth2K Inc., Monday at the Managing Retirement Income conference in Boston.

Francois Gadenne, founder of the Retirement Income Industry Association (RIIA), the endorsing organization of the conference, said part of the challenge moving forward is to better understand the audience. “Why are we selling relationships to segments that want products?” he asked conference attendees.

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The technological change that has made the majority of Americans comfortable doing banking online, and accessing media online, the financial services market must respond to this trend when marketing products to consumers, said Macchia.

“We’re at a point where in many cases customers have advanced beyond the providers in financial services,” Macchia commented.

Providers much consider this in their communication strategies and ask whether they are aligned for success and delivering experiences to the end user, he said. The traditional media marketing messages will no longer work moving forward, Macchia commented.

The Markets February 14, 2007

Morningstar’s New Managed Portfolios Based on Indexes

Morningstar Investment Services (MIS) launched a managed account service consisting of individually customized stock portfolios based on its own indexes and independent equity research.
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According to a press release, Morningstar Managed Portfolios Select Stock Baskets are only available to registered investment advisory firms, who then work with clients to analyze their financial situation, create a risk tolerance profile, select a suitable investment strategy, monitor the portfolio performance relative to its financial goals, and review changes to the client’s financial circumstances.

The Morningstar Indexes form the basis of the stock basket’s investment composition. The basket is tailored to investor’s parameters, which include sector and industry exposure, stock restrictions, existing holdings, and personal tax situation.

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MIS then selects stocks for the portfolio using Morningstar, Inc.’s data and research on the stocks within the index, giving more weight to higher-rated stocks and less weight to stocks with low Morningstar Ratings.

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