New Study Ranks Financial Advisor Loyalty to Financial Services Firms

Wed Feb 20, 2008 8:30am EST

* Reuters is not responsible for the content in this press release.

Cogent's benchmark advisor survey, The Advisor Product
  Forecast(TM), ranks loyalty metrics into 2009 based on advisor data
CAMBRIDGE, Mass.--(Business Wire)--
Fewer than one third of all financial services firms providing
products across five investment categories enjoy positive loyalty
ratings among advisors who sell their products. A new comprehensive
study examining advisors' product use and loyalty across multiple
sales channels, conducted by Cambridge, Mass.-based Cogent Research,
signals major challenges for many product manufacturers, especially as
advisors migrate toward new products that support more complex
investment strategies. The study, The Advisor Product Forecast(TM),
measures advisor loyalty to specific firms across several product
categories: open-end mutual funds, variable annuities, SMAs, ETFs and
closed-end funds.

   The Cogent Research study loyalty measures were derived based on
Net Promoter(R) Score (NPS), a management tool used to gauge the
strength of a firm's customer relationships.

   Key insights from the five product categories measured include:

   --  ETFs are the only category where providers have consistently
        high positive loyalty scores (+19 percent on average), meaning
        promoters outstrip detractors by a significant margin.

   --  By contrast, open-end mutual fund companies--long the dominant
        providers of advisor-sold investment products -- clearly have
        a loyalty problem. Only one in four companies measured have
        more promoters than detractors among advisors currently
        selling their products. The overall average loyalty score for
        the category was -5 percent.

   --  Variable annuity and closed-end fund providers receive the
        lowest average loyalty scores (at -14 percent and -16 percent,
        respectively). In fact, among 17 VA providers measured, only
        three manage to garner loyalty scores in positive territory.

   --  As a category, SMA providers fare somewhat better than VAs and
        closed-end funds, with promoters outpacing detractors by +4
        percent on average.

   "Companies can no longer afford to think of loyalty as a 'soft'
metric," said Bruce Harrington, managing director of syndicated
research for Cogent Research. "Our study projects through 2009 flat or
negative growth for mutual fund and variable annuity sales, trends
that are clearly reflected in these current loyalty scores."

   The Cogent Research study concludes that mutual fund firms and VA
providers need to commit to rebuilding loyalty among advisors across a
wide variety of touch points, including client outreach, product and
service innovation, and other value-added services to support
advisors' changing business models.

   "This is a major wake-up call," says Tony Ferreira, managing
director of Cogent's custom research solutions practice. "Mutual fund
companies and VA providers need to adapt more quickly to changing
advisor-sold market dynamics, or risk slipping even further in the
minds of producers."

   Additional loyalty-related findings from The Advisor Product
Forecast(TM) include:

   --  A 122 point loyalty gap exists between #1 ranked American
        Funds and last place Putnam.

   --  Only eight mutual fund providers, including American Funds,
        Russell, and Franklin Templeton have more promoters than
        detractors among advisors selling their products.

   --  Despite poor loyalty ratings among nearly all VA providers,
        Ameriprise achieves an NPS rating that rivals top-tier
        providers across all product categories.

   --  NFJ Investments (Allianz, Inc.) earns the top advisor loyalty
        spot among SMA providers, ahead of Goldman Sachs Asset
        Management and Davis Selected Advisors, which are tied for
        second.

   --  While iShares ranks number one in advisor loyalty among ETF
        providers, WisdomTree shows surprising strength in advisor
        loyalty as well.

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*T
Advisor Loyalty Rankings: Mutual Fund Providers
Positive NPS          -Industry Average: -5%   23. Evergreen
1. American Funds     11. John Hancock Funds       Investments
2. Russell            12. RiverSource          24. MFS Investment
3. Franklin Templeton 13. Janus                    Management
4. Dodge & Cox Funds  14. PIMCO Funds          25. DWS Scudder
5. The Hartford       15. Van Kampen           26. Federated Investors
6. Davis Funds        16. Eaton Vance          27. Morgan Stanley
7. OppenheimerFunds   17. AllianceBernstein        Funds
8. Natixis Funds      18. BlackRock            28. AIM Investments
Negative NPS          19. Calamos              29. Dreyfus
9. Fidelity Advisor   20. Lord Abbett          30. Pioneer Investments
   Funds              21. Legg Mason Funds     31. Putnam Investments
10. JPMorgan Funds    22. American Century
*T

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*T
Advisor Loyalty Rankings: Variable Annuity Providers
Positive NPS            6. Genworth Financial   11. MetLife
1. Ameriprise Financial 7. ING                  12. Nationwide
2. Lincoln National     8. Pacific Life         13. AXA Financial/MONY
3. John Hancock         9. Prudential/American  14. AIG/SunAmerica
Negative NPS               Skandia/Allstate     15. Sun Life
4. Jackson National     -Industry Average: -14% 16. Aegon/
                                                 Transamerica
5. The Hartford         10. Equitable           17. Allianz
*T

   About Cogent Research

   Cogent Research helps clients gain clarity, obtain perspective,
and formulate direction on critical business issues. Founded in 1996,
Cogent provides custom research, syndicated research products, and
evidence-based consulting to leading organizations in the financial
services and life sciences industries. Through quality research,
advanced analytics, and deep industry knowledge, Cogent Research
delivers data-driven solutions and strategies that enable clients to
better understand customers, define products, and shape market
opportunities in order to increase revenues and grow the value of
their products and brands.

The Castle Group (for Cogent Research)
Mike Trainor, 617-337-9534
mtrainor@thecastlegrp.com

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