American Funds to expand sales force aggressively

Fund giant takes another step to win back investors

Sep 23, 2013 @ 1:26 pm

By Jason Kephart

American Funds plans to increase its sales force by 25% in yet another step to win back investors.

Last week, the company announced that it would begin increasing the transparency around its investment process for the first time, including publishing reports about how its portfolio teams are created.

The sales team will grow to around 145, up from 115, over the next six to eight months to help the company cope with the evolving adviser business model, said Matt O'Connor, director of distribution in North America.

“The way advisers conduct business today is just fundamentally different,” he said. “Their expectations have gone up. They expect us to know more about them, more about their options and the platforms they use. It's much more of a consultative conversation.”

At the heart of the evolution is the trend toward fee-based compensation models.

Wirehouses and regional brokers, which traditionally have been American Funds' core clients, quickly adopting the fee-based model, which has changed the way they interact with asset management companies.

“It has absolutely changed the interaction with the adviser,” Mr. O'Connor said.

American Funds isn't the only asset management company that's been reacting to the shift toward fee-based advisers. The Vanguard Group Inc., which leapfrogged American Funds as the largest mutual fund company after the financial crisis, began the process of doubling its sales force to 220 last year.

Unlike Vanguard, however, American Funds has been dealing with a wave of redemptions across its mutual funds. Since 2008, investors have pulled out more than $240 billion, including $11.5 billion this year. Its total mutual fund assets had fallen to $993 billion as of the end of August, from $1.15 trillion in 2007, according to Morningstar Inc.

Mr. O'Connor said the changes were not caused by the outflows.

“This is not a reaction, it's a renewed commitment to advisers,” he said.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Here's how we came up with our list of undiscovered talent in mutual funds

Senior columnist John Waggoner talks with assistant managing editor Susan Kelly about how hard work, curiosity and passion landed some fund managers on our list.

Latest news & opinion

Brokers accept proposed SEC rule on who can call themselves an adviser

Some say the rule will clear up investor confusion, but others say the SEC didn't go far enough.

SEC advice rule: Here's what you need to know

We sifted through the nearly 1,000-page proposal and picked out some of the most important points.

SEC advice rule seeks to tighten reins on brokers

The proposed rule puts new restrictions on brokers, but it is still unclear how strongly the SEC is clamping down.

SEC advice rule hearing updates

Commission says a lot of work ahead, public will have 90 days to comment.

SEC advice proposal unveiling: Here's what to expect

Chairman Jay Clayton will initiate momentous action Wednesday, as the commission meets to debate a rule on broker and adviser standards.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print