All Articles Finance Creating new products to meet investors needs

Creating new products to meet investors needs

Understanding the industry from the broker-dealer perspective

2 min read


Broker Dealer wish list panel at IPAVision 2016


As changes to the alternatives space continue, understanding how to structure new products so they’re appealing to investors and meet their needs is an important way that sponsors and broker-dealers can work together. Understanding the industry from the broker-dealer perspective was the focus of the panel, “The Broker-Dealer Wish List,” moderated by Hines Senior Managing Director Ryan Sims.


Traditionally, investors in alternative products are looking for income, but given the current environment many are now looking to add value or total return components to their portfolios. Given that, “we’re looking for offerings that make sense, that offer valuations on a regular basis and some type of liquidity,” said Craig Covington of Triad Advisors.


Sticking to products that people know and understand helps with adaptation on the broker-dealer side since complex strategies can be hard to position, said Peter Zimmerman, director – wealth management at Securities America. When sponsors have new product ideas, it’s important to work with broker-dealers to make sure they’re feasible, can get through the due diligence process and make sense for the market.


Broker-dealers are also spending time getting ready for new regulation and educating their advisors. “Right now, we’re up to our eyeballs in DOL-related work and determining what structure will so forward,” said Matt Fries head of products for Cetera Financial Group. “It’s crucial in terms of getting the decisions right so advisors understand what directionally will happen.”


The wide-ranging discussion also touched on liquidity, product life cycles, different share classes and the payment of fund fees. Panelists agreed that industry fees need to come down and that likely will happen given the greater transparency around them.


In terms of advice to sponsors to maximize distribution, Covington said products need to work from an advisory and a fee standpoint. Zimmerman recommended tailoring the “wrapper to the strategy,” while Fries emphasized that being a good partner and communicating were critical as the industry navigates through change.