Products October 3, 2019

Investment Product and Service Launches

OneAmerica expands its group annuity platform with ESG offerings, and Vanguard adds an international core stock fund, overseen by Wellington Management. 

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Art by Jackson Epstein

Art by Jackson Epstein

OneAmerica Expands Group Annuity Platform With ESG Offerings

OneAmerica has added 12 environmental, social and governance (ESG) investment offerings to its group annuity platform, due to increasing interest in ESG investing over the last six months.

“For some, the value of an investment is no longer just about returns, but about returns that are achieved in concert with making a positive impact on society and the world at large,” says Sandy McCarthy, president of OneAmerica Retirement Services. “ESG indexes can achieve these dual ideals, because, as Morningstar research shows, they favor companies with healthier balance sheets, stronger competitive advantages and lower volatility than their mainstream counterparts.”

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Between 2016 and 2018, sustainable, responsible and impact (SRI) investing assets grew more than 38%, rising from $8.7 trillion in 2016 to $12 trillion in 2018, according to the U.S. Forum for Sustainable and Responsible Investment (US SIF).

Investment professionals use standard criteria to evaluate potential investments to determine if they qualify as an ESG investment option. This includes environmental criteria, which considers how a company performs as a steward of nature; social criteria—how a company manages relationships with employees, suppliers, customers and the communities where it operates—and governance, which deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights.

“We provide a full range of investment options, and ESG investing is appealing to a segment of the retirement plan participant community who want to invest in things they believe in to make a positive impact on society and the world at large beyond just returns,” says Terry Burns, managing director, products and  investments, retirement services. “To these investors, there are investment options out there that think the way they think. Our broad menu of ESG funds satisfies that desire.”

ESG funds were added during the second and third quarters. Adding these investment options to the group annuity platform means they are now fully available to OneAmerica clients.

Vanguard Adds International Core Stock Fund, Overseen by Wellington Management

Vanguard has introduced the Vanguard International Core Stock Fund (VWICX), expanding its actively managed roster of more than 70 mutual funds and exchange-traded funds (ETFs).

The new fund, which will be managed by Wellington Management Co. LLP, includes three additional active offerings introduced over the past year: Vanguard Global ESG Select Stock Fund, Vanguard Commodity Strategy Fund and Vanguard Global Credit Bond Fund.

Vanguard International Core Stock Fund is designed to be a core holding, offering an active portfolio of developed and emerging market equities that is designed to outperform across regions, styles and sectors. Vanguard advocates for investing in international stocks and bonds for the diversification and return potential, but its research indicates that many U.S. investors exhibit “home bias” and have inadequate exposure to international securities.

Wellington Management seeks to build an “all-weather” portfolio that prioritizes stock-specific exposure, limiting the portfolio’s style, factor, region and industry risk exposure through a sophisticated and centralized risk management approach. The firm’s approach targets an opportunity set of 350 to 400 companies, of which the fund will seek to hold approximately 60 to 100 large- and mid-cap stocks based on its assessment of each company’s management team, capital allocation and competitive advantage.

Vanguard International Core Stock Fund will be managed by Kenneth L. Abrams, senior managing director and equity portfolio manager, and F. Halsey Morris, CFA [Certified Financial Analyst], senior managing director and global industry analyst.  

Vanguard International Core Stock Fund will be offered in Admiral Shares, with an estimated expense ratio of 0.35%, and Investor Shares, with an estimated expense ratio of 0.45%, both considerably lower than the asset-weighted average expense ratio of 0.75% for the industry’s large-blend fund category.

In Practice October 2, 2019

Being More Methodical About Marketing

Advisers need to balance the many demands on their time that come from running and expanding a practice. 

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There is a wide gap in marketing and client acquisition behavior among advisers, Broadridge Financial Solutions learned in a survey of more than 400 financial advisers.

Only 21% are what Broadridge terms “growth-focused advisers,” which it defines as those between the ages of 25 and 49 who spend more than $5,000 a year on marketing and who say they are “aggressively focused on adding new clients.” Those advisers were more likely to have higher assets under management, to spend more on marketing per acquisition, to gauge their marketing effectiveness in terms of revenue and to be confident in their ability to meet their business goals.

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“There is a similar gap in marketing sophistication in most practice-driven industries, like law firms and medical practices,” Kevin Darlington, vice president of adviser solutions at Broadridge, tells PLANADVISER. “Those who are adept at giving investment advice are often not equipped for running effective marketing campaigns. Unfortunately, those who are not inclined to address this need will probably see their long-term success suffer.”

Darlington acknowledges that advisers face “many competing priorities. Forty percent said finding enough time to meet all of their goals is their top challenge.” So to break out of the “vicious cycle” of not having enough time and not growing their business, Broadridge recommends that they set aside time to market their practice and “find the correlation as to what is moving the needle.” In fact, Broadridge helps advisers analyze their marketing efforts, which is why, Darlington says, he is “biased toward the marketing channels that are measurable.”

The survey also found that, on average, advisers spend 3.3% of their revenue on marketing, which Darlington says is probably the right amount. The key, though, is making sure that those dollars are being spent effectively, he says.

“We are trying to help advisers see across all of their digital channels—websites, social media and digital advertising,” he says. Certainly, Darlington adds, referrals will continue to be important for advisers, but, he says, they need to be paired with active marketing efforts. The survey found that marketing takes 3.7 months to convert a prospect to become a client, while referrals take 1.8 months. The best way for an adviser to begin to think about their marketing efforts, Broadridge says, is to be specific about what their growth, business and marketing goals are—with a clear line of sight into who their ideal target customer is.

The survey also found that advisers’ most popular channel for marketing is websites (76%), followed by in-person events (57%), social media (45%) and customer relationship management (CRM) systems (44%). Moving forward, 19% plan to increase their investments in social media, followed by webinars (14%) and digital media advertising (13%).

Twelve percent plan to hire in-house marketing staff. Among those with more than $200 million in assets under management, 20% plan to do so.

“We’re seeing a planned strategic investment in digital marketing among aggressive, growth-oriented advisers and firms,” Darlington says. “Advisers are already investing in and seeing success in organic social media marketing. As it becomes increasingly difficult to break through the organic clutter, the natural next step is increased investment in paid digital advertising channels that can offer powerful targeting to new audiences and stoke the lead generation pipeline. The most growth-minded advisers are separating themselves from the pack in terms of new client acquisition rates.”

While the economy and the markets have been strong for a long period of time, should they become more volatile, plan sponsors and individuals will be more inclined to change their advisers, Darlington notes. “Those with a better marketing and customer acquisition framework will separate themselves even further from those who do not,” he says.

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