Touchstone Investments, a Cincinnati-based fund manager and subsidiary of Western & Southern Financial Group, is boosting its RIA outreach through several leadership hires as part of the firm’s broader reorganization of its approach in the space.
In an interview with WealthManagement.com, new CEO Ben Alge said the hires (and the firm’s broader RIA restructuring) stem from a shifting landscape in which today’s RIA “mega-aggregators” more closely resemble yesterday’s wirehouses.
“That was really the catalyst for this whole change; the aggregators and our challenge in terms of identifying what they are,” Alge said. “They’re called RIAs, but they’re behaving like wirehouses. How do we best sell to them?”
The new hires include Mike Day as divisional vice president, who will oversee the firm’s Institutional Business Development team and work in the RIA and institutional channels. Day is rejoining Touchstone after a several-year stint as regional director for institutional alts solutions at Advisors Asset Management.
James Kissane, who comes from Columbia Threadneedle, will join as director and senior strategic relationship officer. According to Agle, Kissane acts as a “more traditional” key accounts manager, which will be all the more critical because RIAs used to not require this, instead opting to clear through Schwab or Fidelity.
“What we found was that if you go out and ask for somebody with five to 10 years of experience in calling on RIA aggregators, they don’t exist because the aggregators didn’t exist five or 10 years ago,” Alge said. “So what we looked for was the skillset to build relationships in more regional independent broker/dealers and then to transfer that relationship over to how we’re calling the aggregators.”
In March, Touchstone announced that Alge would succeed E. Blake Moore Jr. as CEO after his five-year tenure at the helm (Alge worked with Moore for a year to ensure a smooth transition and has been in the top spot since early July).
In the past several years, Touchstone entered the ETF market with 10 actively managed funds (launching three in the last six months), and grew managed assets to $30 billion. Alge was previously the firm’s divisional vice president and helped develop the firm’s practice consulting program.
According to Alge, the firm initially divided its RIA outreach into two distribution channels: “institutional” (which largely included RIAs and professional buyers) and traditional retail (including wirehouses and regional IBDs, among other segments). However, several years ago, the firm began shifting its approach, noticing that the bottom end of the RIA market looked more like its retail side.
Alge wanted to deliver more of Touchstone’s practice management into the RIA space, and like many competitors, the firm initially split the RIAs solely by AUM size, assuming the larger the firm, the more sophisticated its needs must be. Alge and the Touchstone team determined their setup needed adjusting.
“We are seeing more and more advisors go either independent or full RIA, and we’re seeing a huge growth in those aggregators that are behaving more like the traditional wirehouses,” he said. “Now we have 25 or 30 of these around the country identified that give years ago would have been wholesaled by a small team of technician specialists that weren’t given the resources to wholesale this way because that’s not what an RIA used to be.”
After the organizational restructuring, the firm hopes to view RIAs through refurbished metrics, instead of lumping them all in one distribution channel (or splitting them by AUM). However, Alge acknowledged that most RIAs don’t fit neatly into one approach.
“There’s no point in us trying to push product to an individual advisor if they’re being told what to buy from the top down,” Alge said. “And there’s no point in us trying to sell to the analyst at the very top of the business if they’re not making the investment decision.”
Alge hoped that Touchstone could build relationships with the RIA aggregators akin to those between the wirehouses and the industry’s largest asset managers, noting that when they approach an aggregator that doesn’t have those relationships already established, Touchstone can be “at the ground floor” and grow with them.
However, he acknowledged that the changing RIA business (and the growth of the mega-aggregators) would demand a reallocation of resources. Still, he suspected that shift would likely come from the other side of traditional retail channels, not from the firm’s RIA focus.
“It is getting more challenging to operate in the traditional distribution channels with the size and scale of some of these firms,” he said. “I think all firms are going to have to start to become more focused on who their top distribution partners are, invest there, and cover much of the world with a more digital-first emphasis.”
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