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

+ Zoom

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

Vanguard's Joe Davis: Prepare for lower expected returns

The next five years will be more challenging for the markets than the past five, according to Joe Davis, global chief economist at Vanguard. Here's why it's more important than ever to stay reasonable with return expectations and stick to the plan.

Video Spotlight

Path to growth

Latest news & opinion

SEC bars former rep for alleged share price manipulation

George Thoreson tried to keep penny stock's price high to enable Nasdaq listing.

Nevada fiduciary law raises concerns among retirement professionals, brokerage industry

Critics complain that it conflicts with ERISA and SEC rules and has potential to spur other states to pass their own version of a fiduciary rule.

A special need for financial advice

Advisers don't have to be experts to help special needs families get a jump on lifelong planning.

Broker-dealers and RIAs at loggerheads over fiduciary rule delay

Companies and groups weighing in with comment letters have vastly different viewpoints on the delay's potential impact.

7 conferences taking advisers beyond financial services

Consider investing some time in learning to build corporate culture, be a better listener and other important skills.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print