Products May 19, 2016

Investment Product and Service Launches

Russell Investments forms new global client strategy and research team; Wilshire Consulting launches the Wilshire ClimateLens; Hartford Funds reveals plans to acquire Lattice Strategies. 
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Russell Investments Launches New Client Strategy Team

Russell Investments announced the formation of a new team within its investment division, dubbed Global Client Strategy & Research (GCS&R).

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The GSC&R team is charged with “integrating the firm’s full breadth of asset-allocation expertise across regions and businesses, enhancing its ability to design innovative strategies for multi-asset solutions.”

Jeff Hussey, global chief investment officer at Russell Investments, explains that investors increasingly want the asset management industry to focus on their individual outcomes, “whether it’s increasing or preserving funded status for a pension plan or building a reliable stream of retirement income for an individual.” He says multi-asset solutions offer investors the “wide range of levers required to meet one’s investing goals, particularly amid volatile markets; and asset allocation is one of the most important considerations for translating objectives into true outcomes.”

Kevin Turner, a 21-year veteran of Russell Investments, has been appointed to lead the new GCS&R team, reporting to Brian Meath, global chief investment officer, multi-asset solutions. Turner, who now holds the title of managing director, global head of client strategy and research, most recently served as the head of consulting for the firm’s institutional business in North America.

To present more information the firm’s new approach to achieving investor outcomes through a multi-asset approach, Russell Investments released this video.

NEXT: Wilshire Consulting launches the Wilshire ClimateLens

Wilshire Consulting launches the Wilshire ClimateLens

Wilshire Consulting announced the launch of Wilshire ClimateLens, a four-part program designed to help clients understand and make informed decisions about the risks and opportunities associated with climate change.  

Wilshire ClimateLens was introduced with a new white paper, “ClimateChange: Evolving Risks and Opportunities for Asset Owners,” co-authored by Wilshire Consulting President Andrew Junkin.  The Wilshire ClimateLens program advises clients to approach climate change as a “broad exercise in risk management, which includes both active engagement and thoughtful investment solutions.”

As detailed in the paper, the four components of the Wilshire ClimateLens program can be taken in sequence or, alternatively, can be integrated individually into an existing strategic plan. They include:

  • Education:  This introductory step provides a structured program explaining the fundamental factors related to the intersection of climate change and investing, including a review of climate science, possible resulting economic consequences, and the risk-return considerations associated with policy and regulatory responses. 
  • Assessment:  The second phase involves the evaluation of current climate-related investment and risk exposure in the context of investment objectives and analyzes organizational capacity, including an assessment of governance and policies, asset allocation, manager selection, engagement, and carbon footprinting.
  • Planning:  As a part of the process, Wilshire Consulting designs a strategic blueprint to identify how asset allocation, investment process and policies, risk management, governance, and operations could be modified to better manage future exposure to climate risk and help capture climate-related opportunities within a prudent decision-making framework.
  • Implementation:  At this stage, Wilshire Consulting executes mission-specific climate-change-related actions that calibrate the portfolio to desired risk-return targets while ensuring the adoption of best practices and procedures.

More information is available at http://wilshire.com/

NEXT: Hartford Funds to Acquire Lattice Strategies

Hartford Funds to Acquire Lattice Strategies

Hartford Funds announced that it has signed a definitive agreement to acquire Lattice Strategies, an investment management firm and provider of strategic beta exchange-traded funds (ETF).

This acquisition marks Hartford Funds’ expansion into the ETF space, “adding robust investment management and product development capabilities to its existing portfolio of actively managed mutual funds.”

“We are excited to acquire Lattice Strategies’ distinctive ETF offering and investment capabilities, which we foresee being increasingly demanded by financial professionals and their clients,” explains Jim Davey, president of Hartford Funds. “The strategic beta space is a natural extension of Hartford Funds’ actively managed platform, enabling us to enter a fast-growing category that will serve as a foundation for growth in the future.”

The acquisition, which is expected to close in the third quarter of 2016, pending customary closing conditions, builds on Hartford Funds’ active management platform and creates in-house investment and product development capabilities for future ETF strategies. Lattice Strategies’ strategic beta ETFs seek growth through multi-factor security selection and the deliberate allocation of risk.

In addition to these strategies, Lattice Strategies provides a range of multi-asset solutions, including liquid endowments, alternatives, equity, and income strategies. Upon completion of the acquisition, Hartford Funds will maintain Lattice Strategies’ office in San Francisco and welcome Lattice’s team of more than 20 professionals.

For more information about Hartford Funds, visit www.hartfordfunds.com.  

Data & Research May 19, 2016

What Does 'Self-Service' Mean to Investors?

New polling from J.D. Power explores the similarities and differences among groups of “self-directed” investors. 
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Many investors categorized by advisory firms and investment managers as “self-directed” still frequently look to their providers for guidance, according to the J.D. Power 2016 U.S. Self-Directed Investor Study.

The new survey matches other recent research showing there is an increasing division in the use and meaning of the word “robo adviser,” with the result that many of the clients who receive automated portfolio management still seek out in-person advice at various times.

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According to the research, “only 61% of self-directed investors in 2016 follow the traditional self-serve, or entirely do-it-yourself (DIY), approach to managing their investments, down from 66% in 2015.” At the same time, a subset of self-directed investors J.D. Power calls “validators,” or “those who want to make their own decisions but still have access to an adviser for support and as a sounding board for big decisions,” jumped to 25% in 2016 from 21% in 2015.

The research points to other client personas that complicate the self-service camp. For example, there are the “collaborators,” those who interact regularly with an adviser and depend on that guidance for investment decisions, although they still actually utilize an automated platform to hold accounts. This group grew slightly in the last year, J.D. Power says, to 14% from 13% of the self-service population.

According to J.D. Power researchers, the growth in validators mirrors a similar trend among full service investors, “of which an increasing number are using dedicated advisers as sounding boards but not as final decision-makers. The growing number of investors seeking a middle ground between the traditional full service and self-directed models is forcing investment firms to develop a hybrid service model that seamlessly combines human interaction and technology.”

“The convergence of self-directed and full service models produces both significant opportunities and threats to established firms in this space,” adds Mike Foy, director of the wealth management practice at J.D. Power. “A perfect storm of new technology, such as robo-advisers; new regulations, such as the Department of Labor’s (DOL) fiduciary standard; and demographic changes, such as the rise of the Millennial generation, is dramatically changing the value proposition traditional firms provide.”    

NEXT: Investors dig the hybrid advisory model

The J.D. Power research goes on to argue that individual investors “crave hybrid investment advisory models.” This is evident in the 25% of self-directed investors who indicate they want on-demand access to an adviser as a sounding board, and in the performance of firms that have made strategic changes in their business models to offer more investment advice to clients in this way.

Part of the momentum comes from Millennial investors entering the markets for the first time. While nearly half (47%) of investors overall are interested in robo-advice when their firm offers it, interest varies quite widely by demographic group. Notably, 72% of Millennials and just 25% of “Pre-Boomers” (those born prior to 1946) favor robo-advice. Among investors not interested, top reasons include a preference to manage their own investments; desire for personal interaction; lack of trust; and personal potential for bias.

Considering the likely impacts of the DOL fiduciary regulations, J.D. Power predicts the rulemaking will “create an opportunity for self-directed firms to capture share from full service firms,” based on the fact that 46% of full service Millennials and 33% of Boomers who are dissatisfied with fees express a willingness to switch to self-directed accounts, should these prove to be cheaper.

Related findings show the percentage of investors using mobile devices to regularly manage accounts has increased 4% during the past four years (18% in 2016 vs. 14% in 2013), but both satisfaction and trade activity among these users has increased significantly.  

“Self-directed firms are often focused on highly active traders who are critical because their transactions generate significant revenue, but these firms all have a large segment of less active clients who are looking for guidance and may currently lack the wealth or desire for a full service adviser,” Foy concludes. “Technology makes it possible for self-directed firms to meet the needs of these clients and retain them as their wealth grows.”

More information about the J.D. Power U.S. Self-Directed Investor Study is here. 

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