A Manager’s Guide to Breaking into Sponsor Platforms

“Uncovering Managers in Today’s Crowded Market: Accessing the Platform” was one of the sessions from the MMI 2011 Fall Solutions Conference.  This post is a summary of that session.


  • Thomas Latta – Global Head of Traditional Due Diligence, Bank of America Merrill Lynch, leading the traditional asset class due diligence teams (35-40 people), both domestic and international, also serves the entire organization including US Trust, his team provides advice and guidance around the implementation of managers. This doesn’t include portfolio construction.
  • Barnaby Grist – Head of Wealth Management at Cetera Financial Group. Formed 18 months ago after three broker dealers from ING merged. Responsible for support of all advisor platform needs. Formerly with Charles Schwab.
  • Greg Nordmeyer – VP and General Manager, Managed Accounts, Ameriprise Financial. $100 bil in AUM in managed accounts. Has P&L responsibility for product management, product development and research teams.

How do you formalize your expectations with managers?

In order to set expectations and improve communications, Ameriprise created a guide for managers coming into their firm, Nordmeyer explained. However, since every relationship is different, each manager can’t be handled in exactly the same way. They are all unique relationship, from large, established asset managers down to very small boutique firms.

The manager’s guide does help explain how to work with Ameriprise’s platform and includes general information about operations, sales and marketing, points of contacts, as well as answers to specific questions such as “how do the quarterly fact sheets work?”. They update it and distribute it annually, Nordmeyer said.

Latta added that Merrill Lynch has wealth management specialists in the field and their job is to identify needs for particular resources and then communicate them back to the Due Diligence Team.

What is the most challenging thing you ask managers to do when they have a product under coverage?

It’s a challenge for managers should be supportive of and be aligned with Merrill’s guidance, yet flexible enough to deliver their own business, Latta contended.  This is more difficult for managers that have an extended distribution force, since they all need to understand Merrill’s positioning.

When a manager’s distribution force goes into the field they find that many Merrill advisors run their own book and have their own investment views, Latta emphasized.  The Due Diligence Team asks that manager organizations to respond to those commercial opportunities with their best advice.  Managers should try to be connected to the Merrill internal organization and understand the balance, he advised. From a selfish perspective, Latta cautioned, “We expect managers to carry our book for us.”

Regarding Ameriprise’s custody-based solutions, a manager may be participating in a variety of ways, Greg mentioned. They could be an SMA manager in one of the SMA programs, they could be manufacturing a mutual fund, or they could be a sub-advisor in one a packaged mutual fund offering.

At the same time, it’s also possible that a manager may be selling their fund or their strategy in one Ameriprise program, while having been removed from their packaged mutual fund offerings because the firm was looking to achieve something else with a different mix of managers, Greg warned.

Managers have to accept that these things can happen in these type of sponsor systems and should just support it, Greg continued. “Don’t sell against it,” was his message. Managers should support Ameriprise’s broader strategy of growing all of their platforms even if the manager is moved out of their packaged offerings.

What’s the best path for an emerging manager to engage with you?

Cetera is not the type of firm that is looking to differentiate themselves by being first to market with a new strategy, Grist advised, and that makes it harder for startup managers. A startup manager should plan to meet the research team and look to build a long term relationship with them. They should not expect to get anywhere for the first 12-24 months, he cautioned.

For more established managers, continued Grist, those that are bringing a successful strategy with a track record, there needs to be confirmation that the field needs it. It will be a higher priority for Cetera if advisors are asking for it. If there is demand from the field, then they will encourage the manager to come and talk to the research and due diligence teams to help understand how how to best fit into the portfolio.

How should a manager prioritize and sequence the touch points in your organization?

The process to bring a new manager out to the field is complex, Grist noted. Cetera has a network of regional entrepreneurs who run from dozens up to hundreds of advisors. If both sides agree that it’s a good fit, then expect to make a real committment and spend a lot of time and effort. “Dabbling isn’t worth your time,” he cautioned.

Cetera has three separate broker-dealers, all of which are fed by a central research/due diligence organization that acts as the gatekeeper, Grist explained. They keep the research team completely separate from the due diligence team and they take opposite approaches to new managers. Due Diligence looks for reasons to say “No” while Research looks for reasons to say “Yes”.

Are there things that managers do that make life harder for you?

Things get complicated when a manager’s capability is positioned differently in various parts of the organization than it was in Due Diligence, Latta said. Managers should establish their central guidance and message with the Due Diligence team and be consistent with their positioning.

Latta observed that managers also make life difficult when they overreact to market developments, either positive or negative. Bank loans are a good example. This past February, there was an enormous rush to offer bank loan funds. It was a tactical opportunity that generated lots of FA demand and a lot of managers wanted to respond to that, he said.

However, the funds were being incorrectly positioned as a core response to the current environment, Latta complained. In these circumstances, the Due Diligence team tries to moderate the conversation and set expectations across the organization, he said.

For managers who already have a strategy on the platform, where is the biggest point of impact? Aligning with the field? Somewhere in between?

Nordmeyer pointed out that there’s a variety of places where a manager can optimize. The Ameriprise research team needs to be made aware of any changes as soon as possible. “We don’t like surprises,” he warned. Managers need to get in front of advisors, because they make the final decision as to whether or not to recommend a strategy to clients. The Ameriprise internal desk is another point of reference to engage with, he suggested, since they can help get to the right advisors.

Managers can increase their probability of success if they locate a couple of advisors who are Key Opinion Leaders at Cetera, Grist mentioned. Word of mouth is the best form of advertising, he insisted. There is a tremendous amount of value for managers in getting these Key Opinion Leaders to talk about their products. Many firms neglect to approach the Advisory Consultants, who are similar to Wealth Management Specialists at Merrill. Advisory Consultants spend all day talking to advisors and therefore, can have a disproportionate effect on a product’s penetration.

Product Innovation. When a sponsor requires a new capability, who do they turn to and how do you get on the shortlist, if you’re not on it?

At Merrill, they are aware of the commoditization of certain capabilities, Thomas responded. ETFs have contributed to this. Managers must dedicate themselves to innovation or their products will quickly become stale. Often the Due Diligence team looks for capabilities that are already available in the marketplace, but not exactly they way we want them to be delivered. They usually reach out to managers that have investment capabilities in the broader space (i.e. fixed income, real assets or equities) and are doing something very effectively. They would need to see significant institutional confidence before trying a new idea, he said.

Thomas explained that there are three things that help get a manager on the list at Merrill: 1) length of relationship, 2) richness of relationship, engagement up and down the organization 3) the interest to carry advice and guidance to the field. these things tell us that we can anchor on the investment capabilities and they’re going to help us position it effectively. In a time of scarce resources, your distribution forces have enormous impact and we’d love to leverage that.



The Wealth Tech Today blog is published by Craig Iskowitz, founder and CEO of Ezra Group, a boutique consulting firm that caters to banks, broker-dealers, RIA’s, asset managers and the leading vendors in the surrounding #fintech space. He can be reached at craig@ezragroupllc.com