A Crowded Marketplace: Why Factsheets and Sandwiches Have Grown Stale for Asset Managers

The relationship between advisors and assert managers continues to evolve. Advisors are adopting new software, new technology, including AI, and new ideas about how to grow their business, which is pushing asset managers to take a more holistic, consultative approach to their relationships.  

Smart asset managers are keeping up by aligning with the changing needs of advisors. One big change is the rise of portfolio construction specialists, offering deeper insights and tools to help advisors better match client goals with portfolio outcomes. Another shift is asset managers investing in practice management support, showing a fundamental change in how they collaborate and engage with advisors. The era of delivering factsheets and free lunches is over.

Morningstar’s recent Voice of the Advisor survey revealed that about half of advisors work with 10 or more asset managers, though this varies by channel. Wirehouse advisors, on average, engage with over 13 asset managers, while in the RIA channel, the average is just over eight, with 35% of RIAs working with fewer than five. The competition for advisors’ time, attention, and allocations has never been more intense.   

So how are asset managers making an impression? The survey results show that active outreach is still the most common means by which asset managers get in front of advisors. 

Making advisors notice you is important, but it’s only the first step in building a successful partnership. The next step is making sure that you are continually noticing them. The advisors we surveyed prioritized customer service as the top reason for choosing an asset manager, followed closely by reputation, performance, and a strong product lineup. Interestingly, while cost remains a factor, it ranked lower in importance. That suggests that when asset managers demonstrate clear value across their offerings, advisors may be more willing to pay for it. 

Recognizing this, many leading asset managers have established portfolio construction teams to help advisors optimize risk/return profiles while outsourcing some of their investment management duties, allowing advisors to focus more on client relationships. This shift to a portfolio consulting mindset enables asset managers to take a vehicle-, style-, and asset class-agnostic approach, freely comparing solutions like model portfolios using ETFs, SMAs, and CITs to maximize returns. To do this effectively, it is critical to have the best and most familiar analysis and research tools and it is equally important that clients, advisors and asset managers speak the same language to ensure everyone is on the same page. 

Listen to the Big Picture in Practice podcast for insight into the three common factors driving the highest growth in advisor practices. 

From the continued integration of AI to the explosion of advanced analytical software, asset managers and the advisors they serve need to find new ways to use the data at their disposal.   

Marc Andreessen, co-founder of Netscape said it well, “More and more major businesses and industries are being run on software and delivered as online services — from movies to agriculture to national defense. Many of the winners are Silicon Valley-style entrepreneurial technology companies that are invading and overturning established industry structures.” 

This is consistent with our survey results that show advisors placed a particularly strong importance on investment management, research and financial planning platforms as well as an asset managers’ ability to assist in growing their practices.

When asked who advisors are most familiar with when it comes to being a trusted supplier of analysis, research and visualizations, Morningstar is an industry leader.  

Integrating research, analysis, and technology into one ecosystem can help portfolio construction teams and asset managers deliver the holistic and consultative advice that advisors expect. For example, Evestnet’s PMG Group used Morningstar Direct to help their advisors sort through nearly 12,000 investment options. “Direct is the one-stop solution. We can’t do what we want to do without the tool,” said Ling-Wei Hew, Evestnet’s principal director of multi-asset and alternative research. 

While some diminish the role that an advisor’s relationship with an asset manager plays in making sound investment decisions, the most successful market participants know it is not about handing out factsheets and buying sandwiches in the office lunchroom. It is the true value-added qualities around data, research, analysis, and reporting that will drive client relationships into the future.  

For more on the latest trends and solutions built on market and investor trends, take a look at our asset manager and advisors and wealth managers segment pages to stay abreast of what you need to continue to succeed.