Thoughts and perspectives from the asset management industry

Are traditional fund factsheets a thing of the past and crying out for disruption, or are they still an essential tool for your investors?

We asked this question to a series of industry professionals – ranging from CMOs to technical strategists to financial advisors – to discover exactly how these investment products have already impacted the industry and how regulation, an increased demand for the latest data, and other factors will influence their future within fund marketing. Here are their responses.

Jim Welsh

Jim Welsh, Macro & Technical Strategist

It’s a starting point for most investors to get a broad view of things like sectors. The weakness is that most money managers are bottoms up looking at individual companies or sectors and trying to identify which companies are the leaders in those sectors or having other characteristics that meet the investment objective for their fund.

The problem the industry faces is when macro events come into play and are significant enough to swamp all that other information, So, if one isn’t able to understand the macro economy, it really renders all those fact sheets meaningless. So, someone at the end of 2007 could’ve read a lot of those fact sheets, and still lost a lot of money during the financial crisis.

Conversely, if they read them in 2009, they could’ve missed the upturn in the market. For example, most mutual fund managers preach a buy and hold philosophy, but valuations are at the third highest level in the last 120 years. Investors may be assuming far more risk than they realize from the information they are being provided on a fact sheet.

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Tony Ialeggio, CMO at Commonfund

Can I say both? Is that fair? I think the idea of a simple one or two page, front and back summary of an investment product has been an essential tool forever. It certainly is within the retail investing space. Financial advisors have used those things every day because it’s a simple way to explain a product to an individual investor. So I think people rely on them and they still serve a purpose.

At the same time, they are absolutely crying out for some disruption.

I think there is a lot of opportunity to tell the story of what an investment is and how it can work for you that would be much more interactive. And much more of a compelling story. The numbers are important, but expecting the end user to look at a bunch of numbers and charts and get a story from that, I think is a tall order. So, there’s a big opportunity there.

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Rawson Gulick

Rawson Gulick, Global Marketing Director at Broadmark Asset Management LLC

Disruption. But, then we’re going back to the regulatory requirements and restrictions, and traditional fact sheets, I don’t think they have enough information to really relay what the strategy is all about. I feel it’s more focused on the fund and the fund expenses and fees, and some of the statistics and performance behind it, but you’re not really going to understand what it’s trying to accomplish – the story. And that’s where the content marketing comes in, and is really the real meat of what the strategies are. Definitely crying out for disruption.

But I don’t know where the balance is. The regulatory bodies are trying to protect the people that are less sophisticated and give them a certain amount of information that they have decided is critical.

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Risley Sams, CFP, MBA

Risley Sams, Financial Advisor, President at RHS Financial

I’m not sure that the traditional fund fact sheet method of disseminating mutual fund results to investors is ripe for disruption, however, it could use a good spring cleaning. At the end of the day, the mutual fund industry must continue to create value for their investor clients. Online financial planning tools, up to date downloadable performance numbers, social security calculators and other features may prove to be the best way for mutual fund families to help their investor clients.

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Katharine C. Earhart, Principal

Katharine C. Earhart, Client Relations and New Business Development at Alesco

The fund fact sheet is crying out for disruption. As both a consumer and advisor, I would like to see content that is a holistic solution and less focused on the product. Stop selling me a product, or a specific strategy. What’s the overall service solution? My goal is to retire so that I’m comfortable, so how are we going to get me there? Don’t tell me to buy this mutual fund because that’s not a solution, that’s just a means to an end.

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Krysten Merriman, Marketing Director at ModernAdvisor

That’s actually a hot topic in the financial industry in Canada right now. Until now, the fund fact sheet has been the investment industry’s disclosure tool. Client statements often included an account balance and not much else. Because of that, most investors would be hard pressed to tell you exactly how well their portfolio has performed, especially those who make regular deposits throughout the year.

New legislation called CRM2 (Client Relationship Model – 2) is rolling out and will soon be impacting individual investors. While Fund Facts are still required, investors’ statements will now include more detailed performance information and an actual dollar figure representing the amount paid in fees throughout the reporting period. It’s not perfect, but we’re excited to see the industry heading in the direction of greater transparency.

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Rick Capozzi

Rick Capozzi, President of Capozzi Advisory Group

That falls into the category of creating a great client experience. Part of the great client experience is simplifying the client’s life, making it easier for them to digest information. Anything that empowers the client by giving them this information in an easy-to-understand format only makes the relationship better.

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Winnie Sun, Managing Director and Founding Partner of Sun Group Wealth Partners

They need disruption – their investor usage is highly limited. They should be made digital, client interactive, customizable, client-friendly. Great question, this got me to think about something I don’t evaluate much.

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