As 2016 closes and 2017 gets off and running, it is an important time for fund managers to be communicating frequently with clients and prospects. The first quarter of 2017 has the potential to put a great deal of money in motion. In addition to the traditional fund sources and flows noted below, many investors may seek to seize new opportunities in sectors likely to benefit from the Trump administration.

With so much money changing hands, it’s important to ensure the financial advisor community knows your positioning, where you believe you can make money for their clients in 2017 and how your track record stacks up.

Communicate Now with Clients and Prospects

We suggest putting a plan together now to take advantage of opportunities to be in the press, on TV and in online publications. In addition, publishing your  2017 outlook sooner than later, a targeted email program or enhanced social media presence may help solidify the assets you have or attract additional ones.

Historical Fund Flows

Historically more assets have flowed into funds in the first quarter of the year than at other times during the year.

During this period, many advisors conduct annual reviews and rebalance client portfolios. There is typically movement from underperformers to the new funds with 4-5 stars from Morningstar.  There is a higher bar now than ever before; active management is under attack to justify fees, elevating consistent higher performance requirements. Consider:

  • Money moves out of 3-, 2-, and 1-star rated funds and into 4- and 5-star funds
  • Sales teams don’t sell poor performers, only winners
  • Retirement platforms replace poor performers with strong performers. Because funds are expensive, they’ll look more closely both at whether a fund has surpassed its index as well as its peers.
  • Employee bonuses give some individuals more money to invest
  • Companies are funding employee 401K and other retirement plans
  • People are contributing money to qualified plans in advance of April 15
  • Investors and advisors rebalance portfolios

 Assets did not flow into funds in the first quarter of 2016 as market volatility heightened investor anxiety; but there were dramatic movements between asset classes as investors moved to safer investments, showing favor to ETFs with their traditionally passive strategies.

What Will be Different About First Quarter 2017? 

In addition to these annual events, first quarter of 2017 has the potential to put a great deal more money in motion.

  • Will a shift occur?  Assets could start moving into stocks in 2017 should the economy have stronger growth. Some economists say the Trump presidency offers bright outlooks in certain sectors.
  • Recently bond funds have attracted assets, but conversations at the Fed continue to tease us with rising interest rates.
  • If the government offers a new stimulus, that could mean more money in consumer pockets.
  • Expected tax cuts in 2017 may be retroactive also putting more money in consumers’ pockets that ultimately stimulates the economy.

Don’t Miss Out as Money Moves

Advisors and investors need to hear from you now, so you are part of their decision-making process. If you always do an annual outlook, make this one bigger and better. If you’ve never done one, this is a good year to start. Let investors know the themes you’ll be watching, the companies you’ll be considering and why. Being a thought leader in uncertain times is sure to set you at the front of the pack.

Then make a commitment to regular updates – and not just quarterly. We all do business with the people we know best. Make 2017 the year your advisors and investors really get to know you, your philosophy, process and plans.

SunStar Content Production

We help our clients plan, write and distribute thought leadership content. Let us know if you’d like to discuss a program to put you in front of your clients and prospects regularly.