Advisors consolidating assets with primary fund providerNews added by Benefits Pro on August 4, 2014

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By Nick Thornton

Financial advisors are consolidating more of the assets they manage with their primary mutual fund provider, according to a study from Market Strategies International.

On average, advisors have $42 million invested in mutual funds, up from $36.8 million last year. But as the overall value of assets in mutual funds has increased, the number of fund providers used by advisors has decreased.

Last year, advisors reported using an average of 10.8 different fund providers. This year, the number dropped to 10.1.

Consolidation picked up last year after remaining flat for several years, said Meredith Lloyd Rice, a senior director at Market Strategies and the author of the report.

“The trend came roaring back to life this year, especially among wirehouse advisors and RIAs,” Rice said.

The proportion of mutual fund assets managed by primary providers increased by 18 percent from last year. Currently, 39 percent of all fund assets are managed by advisors’ primary provider.

The big winner in the consolidation trend is Dimensional Fund Advisors. Nearly half of the 1,437 advisors surveyed said DFA was their primary fund provider, far ahead of American Funds, the second-favored provider; 34 percent of advisors claimed American as their primary provider.

Advisors invest twice as much with their primary fund provider as they do with their secondary provider, according to the report.

Only BlackRock and Pimco saw their funds’ favorability with advisors drop off from last year.

American Funds, Goldman Sachs, Ivy Funds, Lord Abbot and T. Rowe Price all saw increases last year as the primary provider to advisors.

Rice says the numbers should point to a clear strategy for fund companies.

“As advisors pare down the number of asset managers they work with, it is increasingly important for firms to focus on deepening their share of assets with current users.

“If establishing a relationship is like getting on first base, becoming an advisor’s primary provider is hitting a grand slam,” said Rice.

Originally published on
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