The Markets March 28, 2012

Morningstar Launches Indexes Based on Picker Research

Morningstar Inc. launched three Morningstar Ultimate Stock-Pickers Indexes.
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These indexes include the Ultimate Stock-Pickers, Ultimate Stock-Pickers Target Volatility 7 and Ultimate Stock-Pickers Target Volatility 10. BNP Paribas licensed these indexes to serve as benchmarks for three new structured bank notes expected to launch April 2.

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In April 2009, Morningstar equity analysts began to research the quarterly holdings, purchases and sales of 26 top investment managers, or what Morningstar calls the “Ultimate Stock-Pickers.” The Morningstar Ultimate Stock-Pickers Index combines the picks of these top managers with Morningstar’s independent equity research.

The Morningstar Index team first compiles a list of fund holdings from the managers selected by Morningstar’s research team and then pares the list down by excluding securities that Morningstar equity analysts believe are overvalued or inherently difficult to predict. Next, the index team examines how many of the well-regarded managers hold the security, how much of it they hold, and whether managers have been adding to the position to determine a fund manager conviction score. Securities with the highest manager conviction scores comprise the Morningstar Ultimate Stock-Pickers Index.

The Morningstar Ultimate Stock-Pickers Target Volatility 7 and 10 Indexes are similar in construction to the Ultimate Stock-Pickers Index, but seek to control volatility by moving assets in and out of cash positions to maintain standard deviations of seven and 10, respectively. Morningstar reconstitutes the indexes monthly.

For more information on Morningstar’s indexes, visit http://indexes.morningstar.com.

 

Products March 28, 2012

Old Models Causing Firms to Lose Business

Asset managers are missing their most profitable opportunities with financial advisers, a study shows.  
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Old models, imprecise targeting and ineffective communication are causing many firms to lose business, according to a report from kasina titled“The Five Advisor Segments: A New Approach to the Intermediary Market.” The report highlights these inefficiencies and provides a segmentation model based on advisers’ actual behaviors and preferences. It also includes analysis using the new model that identifies five new adviser segments: Order Takers, Technophiles, Support Hogs, Self Sufficients and Rainmakers.  

Traditional segmentation categorizes intermediaries based on channel, size, industry ranking or current value. Those models ignore adviser behaviors and preferences, which often causes sales and marketing programs to be poorly targeted and ineffective, according to the report. kasina’s new model breaks out groups of advisers based on their demographics, behaviors, communication preferences, investment decision processes and support needs.  

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“The reality is that within each of the traditional distribution categories, there are advisers with increasingly diverse traits and preferences,” said Steven Miyao, CEO and founder of kasina. “Taking a ‘one size fits all’ approach is no longer a winning strategy. Firms need to gain a new perspective on these customer groups, and be more responsive to their specific requirements.”

The study provides an actionable framework for developing segment-specific strategies for enhancing the effectiveness of adviser sales and marketing programs. The report also contains best practices, benchmarks and recommendations on how firms can best map their distribution resources to adviser segments, communicate via the most effective mediums, and tailor service and support levels based on value potential.

The study used data on 1,533 intermediaries who completed the kasina FA Vision Benchmarking Survey in late 2011. kasina also teamed up with statisticians to perform analysis.

The report is available for purchase here.

 

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