The very first thing Citywire published for US investors, back in 2016, was a white paper called ‘The Rise of the Professional Fund Buyer’. In it, we wrote:
‘In the world of professional fund selection, the balance of power is shifting. Where once advisors held sway, researchers and analysts increasingly hold the power.’
It was true then, but it is more the case than ever now. In this inaugural list of the US’s 20 Most Influential Gatekeepers, the teams highlighted allocate a combined $1.21tn to third-party strategies, a huge figure to be directly controlled by a handful of investors.
As its name (hopefully) makes clear, this annual project aims to highlight the 20 home-office research teams with the most sway over how wealth assets are allocated.
To do this, we asked more than 50 companies for reams of data. While there are many ways one could define a gatekeeper’s influence on fund flows, we decided that the most objective was to look at the volume of assets that they manage in discretionary model portfolios. While this number ultimately decided whether or not teams made our list, we have shared various other figures too, to give a greater insight into each team’s coverage and clout.
Every number on these pages was either supplied or verified by the teams themselves. Where a large company is not included in this report, it is likely that it declined to supply or verify the necessary data. The scope of this report is wealth management businesses and so it does not include asset managers, subadvisor selectors, or institutional allocators, all of whom may house teams of great influence on fund flows but are not our focus.
We hope this publication provides a quick but comprehensive guide to the size and shape of the home-office landscape today and paints a picture of a role that is only rising in importance.
THREE KEY TRENDS IN MODEL PORTFOLIOS
THE 20 TEAMS
Concord, California-based AssetMark offers advisors both third-party run model portfolios and those overseen by its own team, led by chief investment strategist Zoe Brunson. It does not have a separate list of recommended funds, but those that it has conviction in win a slice of the $23bn run in its discretionary portfolios. Managers hoping to impress Brunson and team must ‘be clear and transparent: Explain what makes the strategy unique and the expectations for the strategy in different market environments,’ she said.
Chief investment officer and head of discretionary portfolio management
Zoë Brunson (pictured)
Chief investment strategist, senior vice president, platform investment strategy
Vice president, due diligence
Director of due diligence
Due diligence leader
Retirement investment analyst
The research team at Baird is led by Kathy Blake Carey, director of private wealth management research, and Aaron Benson, who heads up manager research. They are part of a 10-person research team, covering more than 340 funds. The firm’s total AUM is $215bn, with $18bn in home office-run discretionary model portfolios.
Kathy Blake Carey (pictured)
Director of private wealth management research
Head of asset manager research
Senior portfolio analyst (alternatives)
Portfolio analyst (large cap, mid-cap, real assets)
Senior portfolio analyst (fixed income)
Portfolio analyst (small cap, multi-asset, ESG)
Portfolio analyst (international, emerging markets)
Brinker Capital runs a range of discretionary model portfolios called Destination portfolios. These have a combined $25bn in assets and invest in the firm’s own range of mutual funds that are subadvised by third-party managers. The investment team, led by CIO Tim Holland, also oversees a recommended list of funds.
Chris Hart (pictured)
Head of investment due diligence
Director of SMA and fund due diligence
Director of fund strategist due diligence
The manager research team under Michael Iachini, who reports to Mark Riepe, has recently added active ETFs to its recommended list for the first time. The team has also added research firepower this year, hiring Dan Weiss, formerly Advisor Group’s former top gatekeeper, to be director of due diligence.
Head of Schwab Center for Financial Research
Michael Iachini (pictured)
Head of manager research
Director of investment due diligence for actively managed mutual funds, ETFs, and SMAs
Director of ETF and index fund research
Citi Investment Management’s manager research team is led by Jeff Sutton, who took up his role in 2020 and has been tasked with creating one universal focus list for the firm. He leads a global manager research team of 23 analysts, which includes researchers in the US, Singapore and UK. The team covers about 326 funds across about 77 distinct fund families.
CIO of Citi Global Wealth
Jeff Sutton (pictured)
Global head of manager research
Head of equity manager research
Head of fixed income manager research
Head of multi-asset and liquid alts manager research
At Commonwealth Financial, Brian Price is the head of the investment management and research team. Price oversees a 25-person team that researches managers to compile a recommended list and run about 50 discretionary model portfolios with a combined $11bn.
Chief investment officer
Brian Price (pictured)
Managing principal, investment management and research
DA Davidson’s due diligence team is led by Jeff Hume, head of managed assets research. His team oversees 235 funds and runs $7.5bn in discretionary model portfolios. Hume reports to the firm’s CIO Scott Haigh. The company’s AUM is $50bn.
CIO & portfolio manager
Jeff Hume (pictured)
Head of managed
Robert (Bob) Fischer
Edward Jones puts together portfolios used by almost 19,000 financial advisors who oversee approximately $1.7tn in assets. The model team also manages 11 Bridge Builder funds, a subadvised suite made up of three fixed income and eight equity funds, with about $120bn in assets spread across 40 shops.
Head of manager research
Kristen Steffens (pictured) Head of portfolio management of model portfolios and Bridge Builder funds
Envestnet’s Portfolio Management Consultants team of some 80 people performs due diligence for funds on the firm’s platform and offers its own model portfolios with about $20bn in assets.
Chief investment officer
Brooks Friederich (pictured)
Principal director - research strategy
Principal director – equity and fixed income research
Director of investment management Chad Oviatt leads a team of five researchers at Huntington Private Bank. Together they oversee approximately 508 funds. The firm’s AUM is $26bn, with $4bn in home office-run discretionary model portfolios.
Director of investment management
Director of portfolio solutions
Wealth and investment strategy manager
Wealth and investment strategy manager
Open architecture business analyst
Head of manager solutions Jennifer Solimine leads a team of about 50 analysts who vet more than 1,000 strategies, across a variety of vehicles, that make up the platform for the private bank, which has total assets of $878bn.
Jennifer Solimine (pictured)
Head of manager solutions
US head of manager research
Global director of equity fund research
LPL’s manager research team is led by Jason Hoody who reports to new CIO Marc Zabicki. LPL serves about 19,000 advisors with $1tn in assets, about $60bn of which are under the discretion of the research team.
Marc Zabicki (pictured)
Chief investment officer
Head of manager research and sustainable investing
Fixed income strategist
Asset allocation strategist
Led by Anna Snider, Merrill’s team of some 70 due diligence analysts puts together recommended lists of strategies that are used by the firm’s 18,800 advisors, also known as the ‘Thundering Herd.’ Funds in which the team has high conviction are also used in the home office model portfolios built and run by Joe Curtin’s team, which manages about $203bn in assets.
Head of portfolio management
Anna Snider (pictured)
Head of global due diligence
Morgan Stanley’s global investment manager analysis (GIMA) team of around 70 fund analysts is led by Michael Jabara and Dan Maccarrone and puts together a recommended list of about 540 mutual funds, whittled down from wider platform of 1,650. This research is also leveraged by the firm’s home office model team, headed by Paul Ricciardelli, which runs some $58.5bn in discretionary assets.
Head of portfolio and investment manager solutions
Head of portfolio solutions
Dan Maccarrone and Michael Jabara (pictured, left to right)
Northwestern Mutual’s Garrett Aird, vice-president of investment management and research, leads a team of 12 analysts, who cover more than 480 funds across 100 fund families. The firm’s total AUM comes in at $260bn, with $61.4bn of that held in home office-run discretionary model portfolios.
Garrett Aird (pictured)
Vice president, investment management and research
Senior research consultant
& portfolio analyst
Senior research analyst
Senior portfolio manager
PNC’s manager research team is led by Scott Lavelle, who has been in the role since 2011. Lavelle reports to CIO Amanda Agati and his team covers over 500 funds across 145 distinct fund families. PNC has an AUM of $146bn, of which $7bn is in discretionary model portfolios.
Scott Lavelle (pictured)
Head of manager research
Head of portfolio construction
Head of alts
Head of operational
Head of traditional investments
Director of product management
Raymond James’s Asset Management Services division houses a team of about 25 analysts who pick strategies for the firm’s Freedom portfolios, which come in 124 varieties (depending on underlying vehicles and investors’ risk profiles). Tom Thornton leads the team that picks funds for these models and oversees a list of recommended SMAs. Erina Ford leads a separate team that runs a different list of recommended funds and ETFs.
Tom Thornton (pictured)
Asset Management Services, manager research & due diligence director
Chief portfolio strategist
Head of asset allocation
Due diligence office
Due diligence office
Director of mutual
RBC’s head of manager research, Kevin McDevitt (pictured), oversees a team of 24 research professionals around the globe, with 10 of those based out of Minneapolis. Those analysts run a recommended list of some 250 mutual funds, which is used by some 2,100 advisors with about $510bn in client assets.
Hunter Craig and Brandon Thurber are responsible for Regions Bank’s investment research group and due diligence process. Their team puts together the list of 232 recommended funds used by the firm’s advisors. They report to Regions CIO Alan McKnight. The company has an AUM of $55.3bn.
Brandon Thurber (pictured)
Chief market strategist
Director of investment research
The Wells Fargo manager research team is led by Sage Lincoln and Kevin Sullivan and is responsible for putting together a list of around 1,200 strategies to be used by various business lines within Wells Fargo. Structured by asset class, the team is spread across the US and beyond, with offices in San Francisco, New York, Charlotte, St Louis, Denver, Raleigh, London and Hong Kong. Those funds most highly recommended by the research team may also find their way into model portfolios overseen by head of global portfolio management Mark Litzerman.
Mark Litzerman (pictured right) Head of global portfolio management
(pictured centre) Co-head global manager research
(pictured left) Co-head global manager research
Global fixed income lead
International equities lead
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For investors to succeed over the long term, their portfolio needs to be managed with discipline and thoughtful attention to risk and return opportunities. In challenging market environments, portfolio management is even more important — and more of a focus for clients. Yet just when additional time and resources are needed to identify risk/reward opportunities in turbulent markets, clients are typically most in need of additional servicing. This can create a dilemma for financial professionals: Should they spend more time with their clients and give them appropriate attention or focus on investment research and due diligence?
The investing landscape is full of uncertainty and volatility today. That’s why it’s an opportune time to consider partnering with an asset manager to help navigate volatility and identify topical opportunities. Model portfolios can help ensure that clients get the professional investment management that they want — and need — while giving a financial professional more time to nurture existing client relationships and prospect for others in need of wealth planning. We examine three key trends in model portfolios, which are particularly relevant in challenging times.
When meeting with financial professionals, we’re frequently asked what we’ve changed or adjusted in our model portfolios and why. These questions usually relate to what’s happening in the markets and economy today or our expectations for the next few months. We believe a disciplined, long-term approach to investing is foundational for success in all market regimes. In fact, research has shown that 92% of portfolio performance variation is driven by strategic asset allocation decisions.¹ That’s why we devote significant resources to forecasting long-term capital market assumptions and asset class behaviors over the complete business cycle.
We also believe that tactical views can be used to take advantage of shorter-term opportunities within a cycle. Our model portfolios blend a strategic asset allocation approach with tactical adjustments based on what we think the market will do over the shorter term. We frequently analyze various leading economic indicators and market sentiment across the globe to identify prevailing economic regimes that can inform our asset allocation decisions within a business cycle. Our tactical asset allocation macro framework is shown below.
Another takeaway from meeting with financial professionals is their belief that diversification across asset managers is a way to find best-in-class strategies. We agree. While Invesco offers strong investment products in a variety of asset classes, vehicles, and management styles (active, passive, and factor), we don’t claim to have the best products in every category. This acknowledgment is the primary driver of our adoption of “multi-manager” model portfolios, which allocate to more than one asset manager. It provides exposure to other investment managers that are complementary to those from Invesco.
Our manager selection process focuses on meeting portfolio objectives, promoting diversification, and minimizing risk while generating better long-term risk-adjusted returns. All managers, whether external or internal, and if they manage liquid or illiquid, or public or private assets, are evaluated and selected through a rigorous qualification process, which includes quantitative and qualitative reviews. We also consider costs. Some asset managers specialize in lower-cost passive products, while others have more of a specialty in higher-cost actively managed products. Utilizing multiple managers allows us to build cost-effective solutions with underlying ETFs and mutual funds with a range of fees.
Clients aren’t just asking for investment help — they want help managing their financial lives too. That takes time. Managing a practice and team does too. Professionally managed model portfolios are a way to free up the capacity to do this. The next step is to maximize that time.
Invesco Global Consulting (IGC), the industry’s largest communication and consulting services group with a focus on financial professionals,² can help them enhance their practice and better serve their clients.
We research more than investments. IGC has studied language since 2007, completing more than 20 studies, 65 focus group sessions, and over 10,000 investor surveys³ to identify what words and phrases may best help clients understand the investments that are recommended and the value that a financial professional offers. In addition to our language studies, we have comprehensive practice diagnostics and peer benchmarking anchored by third-party research and 35+ research-based programs that help support financial professionals in four key areas: new business development, wealth management, practice management, and client service. Our 20 tenured and knowledgeable consultants help financial professionals achieve their goals through presentations, customized workshops, and comprehensive one-on-one consulting.
Model portfolios solve for investments. But our model portfolio offering does much more. We want to help create what we call a “model practice,” one that not only optimizes portfolios but client communication and business-building too.
Three key trends in model portfolios
Director of US Model Portfolios
Invesco Investment Solutions Team
Head of Model Distribution
Invesco Wealth Management Platforms Group
Top-down allocation: Macro analysis
Historical: Excess returns (%) across asset classes
Sources: Invesco Investment Solutions’ proprietary global business cycle framework and Bloomberg L.P. For illustrative purposes only. Index return information includes back-tested data. Returns, whether actual or back-tested, are no guarantee of future performance. Annualized monthly returns of the defined risk premia from January 1973 – December 2020, or since asset class inception if at a later date. Includes latest available data as of most recent analysis. Asset classes excess returns defined as follows: Equities = MSCI ACWI - US T-bills 3-Month, High Yield = BBG HY - US T-bills 3-Month, Bank loans = Credit Suisse Leveraged Loan Index – US T-bills 3-Month, Investment Grade = BBG US Corporate - US T-bills 3-Month, Government bonds = US Treasuries 7-10y - US T-bills 3-Month. See the footnotes for asset class premium definitions and additional information on back-filled index data.
1. Blending strategic and tactical asset allocation
2. Rise in multi-manager model portfolios
Manager selection: Fund screening using comprehensive qualitative and quantitative criteria
For illustrative purposes only.
3. Focus on client and practice management
How financial professionals spend their days⁴
Create a model practice
¹ Sources: Brinson, Singer and Beebower, 1991. Ibbotson, Kaplan, 2000.
² Source: The largest study ever done on the language of financial services has been conducted by Invesco Global Consulting and Maslansky + Partners since 2007. Invesco Advisers, Inc. is not affiliated with Maslansky + Partners. Data shown is through 12/31/21.
³ Source: Cerulli Associates, The Cerulli Report: U.S. Advisor Metrics 2021. Used with permission.
⁴ Source: RA Prince & Associates, Inc. as of 3/31/20.
Tactical asset allocation framework, macro regime, asset class, excess returns, definitions, and back-tested performance notes. Equities = MSCI All World Index minus Bloomberg US Generic Government 3 Month Yield Index; High Yield = Bloomberg High Yield Index minus Bloomberg US Generic Government 3 Month Yield Index; Bank Loans = Credit Suisse Leveraged Loan Index minus Bloomberg US Generic Government 3 Month Yield Index; Investment Grade = Bloomberg US Corporate Bond Index minus Bloomberg US Generic Government 3 Month Yield Index; Government Bonds = FTSE US Global Bond Index 7-10 Yr. Index minus Bloomberg US Generic Government 3 Month Yield Index. For the 10-Yr Treasuries, FTSE US 10-Year Treasury On-the-Run Total Return Index has been used from 1985 onward. Prior to 1985, history is back-filled with estimated total returns using 10-Yr yields from Bloomberg between 1970 and 1985. All information presented prior to the inception dates is back-tested. Back-tested performance is not actual performance but is hypothetical. Although back-tested data may be prepared with the benefit of hindsight, these calculations are based on the same methodology that was in effect when the index was officially launched. Index returns do not reflect payment of any sales charges or fees. Performance, actual or hypothetical, is not a guarantee of future results. An investment cannot be made in an index. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is being provided for informational purposes only, is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in any investment-making decision. This should not be considered a recommendation to purchase any investment product. As with all investments, there are associated inherent risks. This does not constitute a recommendation of any investment strategy for a particular investor. Investors should consult a financial professional before making any investment decisions if they are uncertain whether an investment is suitable for them. Please read all financial material carefully before investing. For additional information about these strategies, contact Invesco. Past performance is not indicative of future results. The opinions expressed are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. The Invesco Investment Solutions team is a business unit of Invesco Advisers, Inc., a registered investment adviser that provides investment advisory services and does not sell securities. Invesco Advisers, Inc. is an indirect, wholly owned subsidiary of Invesco Ltd. Invesco Advisors, Inc. NA2460570 10/22
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