Curian Capital's unexpected announcement last week that it is closing shop at year-end has sent the $300 billion turnkey asset management platform space into a feeding frenzy, as competitors scramble to woo advisers currently working with the $11 billion platform.
The 12-year-old asset-management subsidiary of Jackson National Life Insurance Co. has been relatively tight-lipped about exactly why it is shuttering the operation, but industry counterparts are immediately more focused on capturing some of the market share.
“I'd call it the Oklahoma land rush,” said John Coyne, president of Brinker Capital, which operates one of the industry's larger TAMPs at $18.3 billion.
In the wake of Curian's
July 30 announcement, a number of firms have
already issued public statements essentially rolling out the welcome mat to anybody currently doing business on the Curian platform.
“We're certainly
reaching out to the adviser community to do their due diligence on our platform,” said Mark Leonard, senior vice president of marketing at EQIS Capital, which operates a $1.25 billion platform that shares some similarities with Curian.
CLEARED OUT BY FIRST QUARTER
“We think that in a perfectly rational market, we would get all of Curian's business, just because of our similarity to Curian in terms of low [$25,000] minimums and the fractionalization of shares,” he added.
That kind of optimism is rooted in the significance of Curian's plans to shut down, which will require all accounts be settled and cleared out during the first quarter of next year.
“This is an earthquake for this business, and I don't know if there's any precedence for it,” Mr. Leonard said. “It's been crazy; the phone has been ringing off the hook. They've been coming through our website, direct phone calls to our president, and vice president of distribution.”
Jackson National representatives did not respond to requests for comment.
In an emailed response to inquiries regarding the reason for the abrupt shutdown, Curian Capital said: “Curian periodically evaluates its business in light of changing economic, market and industry conditions. Given the industry-wide changes in technology, product offerings and market size, Curian has determined it cannot remain commercially positioned to provide clients high value investment programs over the long run.”
Diane Woodward, a financial planner at Oak Tree Wealth Management, stopped using the Curian platform more than two years ago because she was not satisfied with the technology or the performance of investments she was using for her clients.
“It didn't surprise me to see this,” she said. “Curian was not keeping pace with the cutting edge of the TAMPs.”
Without having any inside knowledge of what drove the decision to close the TAMP, Mr. Coyne of Brinker speculated that it is at least partially due to the fractional shares, which enables smaller accounts to hold percentages of single stocks as opposed to whole shares.
That flexibility, he said, which is also offered by EQIS, is less compatible with broker-dealer platforms that want to custody assets managed by advisers working on the various platforms.
TECHNOLOGY NOT ALIGNING
“The key issue is that the broker-dealers now want to have the custody of assets that were once custodied at the TAMPs,” Mr. Coyne said. “We recognized this trend five years ago and started adjusting our product array. That's difficult for Curian because they use the fractional shares and the technology is not aligning with the broker-dealers.”
He added that Curian likely would have lost its competitive edge if it had abandoned its fractional share option.
Meanwhile, Brinker, which plans to release a statement Wednesday detailing how it will go after some of Curian's market share, is showing some early flexibility of its own.
“Brinker will not be the answer to every adviser, but we feel there will be many, many advisers that will be attracted to us,” he said. “Our goal is to be as flexible as possible, and in this particular instance our minimum investment will be $25,000.”
Charles Goldman, chief executive of the $26 billion TAMP AssetMark, also cited the fractional share issue as a unique challenge for Curian. But, like most TAMP operators right now, Mr. Goldman is zeroing in on how to benefit from Curian's sudden demise.
“We're 100% focused on helping the advisers and their clients find a new home,” he said. “This is the kind of thing you just scratch your head about, but we're very much interested in growing our business.”
