Bridging the Alternative Investment Information Gap

Sue BerginSue Bergin, President, S Bergin Communications

The groundswell of interest in alternative investments continues to build, creating a thirst for clear, comprehensive and client-facing educational materials.

According to Lipper, alternative mutual funds saw the biggest percentage growth of any fund group, with assets under management increasing 41% to $178.6 billion in 2013. A recent report by Goldman Sachs projects liquid alternatives are in the early stage of a growth trend that could produce $2 trillion in assets under management in the next 10 years. In order for this to happen, however, investors must gain a better understanding of how alternative investments work, how they function within a portfolio, and where potential benefits and risks could occur.[1]

EducateAlternative investment strategies are a separate beast than the traditional methods of investing and traditional asset classes that most investors are familiar with. From divergent performance objectives, to the use of leverage, correlation to markets, liquidity requirements and fees, a fair amount about alternatives is different from traditional investments. Understandably, investors have many questions before they can decide whether to and how much of their portfolio to dedicate to alternative investments.

The task of educating investors about alternatives is falling largely on the shoulder of the advisory community. Well over half (60%) of the high-net-worth investors recently surveyed by MainStay Investments, indicated financial advisors as the top resource for alternative investment ideas. Trailing advisors was internet-based research (41%), research papers and reports (35%), and financial service companies (30%).[2]

Historically, advisors have shied away from recommending alternative investment strategies because they are too difficult to explain. The conundrum they now face is that 70% of those advisors surveyed also acknowledge the need to use new portfolio strategies to manage volatility and still seek positive.[3]

Bridge the Education GapIt’s important that advisors start to value the use of alternatives and find ways to bridge the information gap for investors. The good news is that investors have tipped their hands in terms of what they really want to know. According to the MainStay survey, clients want more information in the following areas:

 

  • Explaining the risks associated with alternative investments (73%)
  • Learning about how alternatives work (71%)
  • Finding out who manages the investments (54%)
  • Charting how alternatives affect returns (46%)

[1] http://www.imca.org/pages/Fundamentals-Alternative-Investments-Certificate

 [2] “HNW Investors Turn to Advisors For Alternative Investment Guidance,” InsuranceNewsNet, April 3, 2014.

[3]Few advisers recommend alternative investments: Respondents to a Natixis survey said that they stick to strategies that can be explained to clients more easily,” InvestmentNews, October 24, 2013

The views expressed are those of Brinker Capital and are for informational purposes only.

Investment Insights Podcast – February 28, 2014

Bill MillerBill Miller, Chief Investment Officer

On this week’s podcast (recorded February 27, 2014) we are back to the traditional format of what we like, what we don’t like, and what we’re doing about it:

  • What we like: ISI Homebuilding Survey surged this week, increasing odds that the overall economy will improve as the cold weather improves
  • What we don’t like: Investors don’t know if the recent slowdown is due to the cold weather or if there’s something greater at work beyond that
  • What we are doing about it: No major changes; view remains that markets will grind upwards all year long

Click the play icon below to launch the audio recording.

The views expressed are those of Brinker Capital and are for informational purposes only. Holdings are subject to change.

John Coyne on Bloomberg TV

Brinker Capital Vice Chairman, John Coyne, sat down with Deirdre Bolton of Bloomberg TV to discuss the results of the 3Q13 Brinker Barometer Survey.

Click the image below to view his segment.

Bloomberg_300x205_PlayBtn

Here is an infographic illustrating some of the key results from our Brinker Barometer that John discussed.

Financial Advisors Finally Confident in U.S. Economy, Q3 Brinker Barometer Finds

We have the results of our third quarter 2013 Brinker Barometer® survey, a gauge of financial advisor confidence and sentiment regarding the economy, retirement savings, investing and market performance.

For the full press release, please click here, but in the meantime check out the infographic below for some of the highlights:

BrinkerBarometer3Q2013_WebFINAL

Social Media Strategies: Yield to Client Preferences

Sue Bergin@SueBergin

Every investor has his or her unique communication and learning style.  Some prefer face-to-face meetings, while a quick text message will suffice for others.  Some investors are highly analytical and need to understand the data behind their investment philosophy while others take a “just give me the bottom line” approach.

Most successful advisors have become adept at assessing the communication and learning styles of their clients and adapting accordingly.  When it comes to a social media strategy, advisors should use a similar approach.

10.15.13_Men are From LinkedInAccording to the recent survey[1] sponsored by MassMutual and conducted by Brightwork Partners, “women are from Facebook, men are from LinkedIn,” various demographic groups are congregating around their social media channel of choice.  Consider these stats:

  • 70% of women routinely use Facebook vs. 59% of men
  • 57% of survey respondents over the age of 50 use Facebook
  • 32% of men use LinkedIn, compared to 15% of women
  • 17% of men versus 10% of women rely on Twitter as an information source
  • 36% of LinkedIn users have household incomes that exceed $100,000
  • 15% of LinkedIn users have household incomes of $50,000 or less
  • Survey respondents in their 30s are 14% more likely to use social media for retirement and investment education than their older counterparts
  • 80% of Pinterest’s 70 million users are women[2]

MassMutual’s study is the latest in a line of research that demonstrates the role social media can play in educating clients.  From a tactical perspective, it is helpful to note that a Tweet, Facebook post, LinkedIn message or Pinterest post will reach only the audience following that channel.

From a practical standpoint, you may want to synchronize your social media messages.  So, for example, if you sync your Twitter and LinkedIn files, LinkedIn contacts will see your Twitter updates and vice versa.  Keep in mind that some content is more appropriate for certain channels over others.  For example, tweets can only accommodate 140 characters but Facebook posts may be more extensive. Pinterest is most appropriate for visual content, like the inspiring image below originally pinned by ForexRin.

10.15.13_Men are From LinkedIn_1In the end, social media is about listening and engaging with your clients.  Services like Hootsuite, Tweetdeck and GoGoStat can help monitor and track your social media engagement so that you will know which channels are most valuable to your practice.

Applying Behavioral Finance To Investment Process Crucial To Financial Advisors, Brinker Barometer Finds

Earlier this week, the results of our latest Brinker Barometer advisor survey were made public. Click here to read the full press release. This particular Barometer had a focus on aspects of behavioral finance and how advisors gauge progress towards meeting their clients’ financial goals.

Check out some of the most interesting survey results in the infographic below!

1Q13BrinkerBarometer_5_14_13

You: The Key to Better Investment Returns…and More

Sue BerginSue Bergin

John Hancock’s recent Investor Sentiment Survey demonstrates that over half of investors who use an advisor are confident (56%) that doing so will lead to better investment returns.[1]

How’s that for a confidence boost?

The study also gives us tremendous insights into why clients choose to work with financial advisors and highlights the importance of three factors:

  1. Realistic assessment of one’s own investment management capabilities
  2. Confidence in advisors’ ability to generate better returns than the individual could do themselves and add value to the process
  3. Time constraints

A significant number of participants who work with advisors (47%) do so to obtain a comprehensive financial plan and for validation that their financial decisions are on track.   They tend a need to have a professional’s stamp of approval on their decisions.  This is a moderate showing of confidence in his or her own ability and reveals a willingness to seek and listen to advice.

You Are The Key37% of those working with advisors claim to do so because they lack the knowledge to manage their own investments.  43% of the respondents who do not have an advisor chose to go at it alone because they feel like they can manage comfortably on their own.

36% of the “do-it-yourself” group said that they did not think advisors provided good value for their money.

Working with An Advisor

No Advisor

56% believe working with an advisor will lead to better investment returns 43% have confidence in their own abilities and therefore do not need to work with an advisor
47% seek comprehensive financial planning advice and to validate financial decisions 40% actually enjoy the process
36% acknowledge they couldn’t manage investments on their own 36% lack confidence in advisors
24% don’t have the time

Few people think they could perform surgery on their own knee, but many investors believe they could get comparable results without a professional’s assistance. Technological innovations are only going to fuel that sentiment by making it easier and more fun than ever for the do-it-yourselfers.  The key for advisors is to focus on your unique qualification and the value you add to the relationship.

Instill confidence in your abilities, so theirs are never even considered.


[1] John Hancock Investor Sentiment Survey, January 7, 2013

Phones Will Be Ringing by, Sue Bergin

For many advisors, the phone lines seem to simmer down just a bit during the summer months.  That is about to change, however, according to a recent survey conducted by Edward Jones.

In mid-July, 2012 Edward Jones interviewed 1,010 U.S. adults to determine the issues that will impact investment and savings decisions the most. They found that 90% of Americans plan to change their investment strategy in the next six months. 

The election was sited as the most significant reason for driving strategy changes.

39% percent of respondents indicated that the election was, again, the most significant reason prompting investment and savings changes.  The next most significant factor was healthcare costs, representing 30% of those surveyed.  Global economic issues were prompting 20% of the respondents to consider investment strategy changes.

96% of people earning more than $100,000 a year were the most likely to say that they will make changes to their investments and savings.[1]

Take advantage of these final few weeks of summer by proactively scheduling investment review meetings. This will give you more control over your calendar in the fall, and help you prepare for the discussions that will inevitably occur.