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Study: Diminished Investment Brands Pose Challenge for Advisors

A new study suggests that participants are increasingly aware of distributor brands, rather than the investment brands that underlie those offerings.

Last year, only two-thirds of Americans knew the mutual funds, bonds, exchange traded funds (ETFs) or other financial products they owned, according to the latest Hearts & Wallets study, Product Trends: Ownership, Allocations & Competitive Metrics.

In contrast, five years ago, three out of four consumers (76%) could identify their investment products. The report notes that, in the 1990s, high product awareness prompted consumers to seek out products like the Magellan Fund of Fidelity Investments, which was once the world’s best-known mutual fund.

“With the exception of Fidelity, which is definitely owned by 11% of U.S. households, the household percentage conclusively reached is down for most managers,” said Chris Brown, Hearts & Wallets partner and co-founder. “Loss of power among manufacturers is exacerbated by the white labeling trend in the defined contribution space. Investment menus are shifting from manager-branded portfolios to generically named options in which money management firms are virtually hidden from participants.”

For the industry, current low awareness is a major drawback for product managers, who continue to lose influence and ability to interact with consumers. According to the report, the trend also negatively impacts financial advisors and “stores,” as they must potentially expend additional time to construct and explain solutions for disengaged consumers.

The study found a rising asset allocation and retail distributor awareness:


  • 75% of all consumers could identify their asset allocation in 2014 (up from 68% in 2013).


  • 90% can identify and answer questions about at least one of their “stores,” as Hearts & Wallets refers to retail and defined contribution providers that work directly with investors.

Hearts & Wallets says that overall reach quality can be measured by “Shareholder Awareness Score,” which calculates the percentage of people who think they might be shareholders of a firm’s investment products who are sure they actually are. According to the report, Fidelity and Vanguard achieve the best practice, with two-thirds of all possible shareholders confident they are shareholders.

Among purely third-party distributed funds, the best practice is 50% awareness, achieved by American Funds. BlackRock is on the rise, with a Shareholder Awareness Score up from 41% in 2011 to 47% in 2013. Most other firms stayed constant, except for Putnam, which declined, according to the report.

One promising area is packaging advice into products. Almost half of Americans (48%) prefer a goal-based product rather than a portfolio created of many component investments, the study found. Beyond retirement and college savings options, the goal could address the No. 1 savings goal for younger consumers: to build up an emergency fund, as identified in Hearts & Wallets research.

Another value-added product solution might include multi-asset class products. Only 14% of households own these products, but those who do allocate an average of almost half their portfolios (42%) to them.

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