Fund buyers look beyond past performance

Fund performance is no longer the most-important factor affecting adviser uptake as operational constraints add an extra layer of compliance to fund selection. According to the report, fund performance can “open the door” to a fund manager meeting with an adviser, but this door can be closed quickly in the event of operational friction.

Operational friction includes problems around platform availability, research house ratings, support from a managed account provider, data feed quality, administration levels, and AI. Advisers consider factors such as how a fund fits within a portfolio, what risk it holds, how it behaves in different market environments, and how it sits alongside existing portfolio exposures.

Changing Shape of Fund Selection

Performance still gets a manager into the conversation but it no longer guarantees implementation. The report states that performance is becoming a relatively less complete answer to the questions advisers are asking, such as how a strategy improves the client portfolio in a way that is easy to understand, implement, and defend.

Advisers are building portfolios inside compliance, technology, and client communication constraints. A strategy that looks attractive in isolation may be less compelling if it is difficult to implement and integrate into existing portfolio models.

There is greater usage of platforms by advisers to improve their workflow, shaping behavior and making funds not featured on their chosen platform easy to overlook. Platforms are used to review portfolios, compare solutions, and implement model portfolios, not just for administration and transaction processing.

Platforms’ Influence on Advisers

The more an advice firm builds its workflow around a platform ecosystem, the more likely it is that future product decisions will be shaped by that platform. Platforms influence what advisers see first, which options are easiest to implement, which products are easiest to report on, which models are available, and which solutions create the least operational friction.

Future distribution teams will need to bring better tools to the adviser conversation and support internal investment committee questions, comparing portfolio outcomes and explaining their role in a managed account model.

Providers will likely adjust their targets and KPIs for their teams based on engagement and influence rather than pure sales numbers. A future wholesale distributor is less likely to succeed through access alone and more likely through insight, technical capability, and the ability to help advisers solve portfolio construction challenges.

Management may focus less on the number of meetings and more on the quality of engagement, conversion by segment, influence inside model portfolios, platform penetration, content effectiveness, and ability to support scalable flows.