Repeat Customers?
Advisers not generally loyal to providers
Reported by Rebecca Moore
Using a Net Promoter Score (NPS), a management tool used to gauge the strength of a firm’s customer relationships, Cogent said, The Advisor Product Forecast measured adviser loyalty to specific firms across several separately managed account product categories: open-end mutual funds, variable annuities, separately managed accounts (SMAs), exchange-traded funds (ETFs), and closed-end funds.
The research found that ETFs are the only category where providers have consistently high positive loyalty scores (NPS of +19% on average, meaning promoters outstrip detractors by a significant margin). Contrarily, variable annuity and closed-end fund providers receive the lowest average loyalty scores (at -14% and -16%, respectively). Among 17 variable annuity providers measured, only three managed to garner loyalty scores in positive territory.
Only one in four open-end mutual fund companies measured have more promoters than detractors among advisers currently selling their products. The overall average loyalty score for the category was -5%. SMA providers fare somewhat better, with promoters outpacing detractors by +4% on average.
“Companies no longer can afford to think of loyalty as a “soft” metric,” according to Bruce Harrington, Managing Director of Syndicated Research for Cogent Research. “Our study projects through 2009 flat or negative growth for mutual fund and variable annuity sales, trends that are clearly reflected in these current loyalty scores.”
The mutual fund providers that enjoyed a positive NPS were: American Funds, Russell, Franklin Templeton, Dodge & Cox Funds, The Hartford, Davis Funds, Oppenheimer Funds, and Natixis Funds. The variable annuity providers that received a positive NPS were Ameriprise Financial, Lincoln National, and John Hancock.
NFJ Investments (Allianz, Inc.) earned the top adviser loyalty spot among SMA providers, ahead of Goldman Sachs Asset Management and Davis Selected Advisors, which tied for second. iShares ranked number one in adviser loyalty among ETF providers, and WisdomTree also showed strong adviser loyalty. More research from Cogent can be found at www.cogentresearch.com.