First nationally branded storefront investment advisory organization enters new major markets, including Boston. Boston locations represent 69th and 70th locations for this fast-growing firm.
The need for "emerging affluent" targeted investment advisory services. To date, those with $50K to $500K have generally had to set up a brokerage account or work with a wirehouse/bank based broker. Now, there is a fee-for-service option widely available to customers that were previously not given this sort of service.
In the past three months, several of the major Wall Street firms have launched initiatives to serve the emerging affluent. Citigroup, for one, hired Jonathan Clements away from the WSJ to head up their educational component to this venture.
The fact of the matter, my client (The Mutual Fund Store) launched in 1996 to serve a segment of the marketplace that didn't have access to investment advice on a fee-basis. Since then, brokerage firms and bank representatives have began to serve this market with fee-based WRAP programs. The Mutual Fund Store gets 100% of its compensation from the fees it charges for the advice it dispenses. No loads, commissions, soft dollars, etc. are accepted. The knock on The Mutual Fund Store is that they are using only no-load or load-waived mutual funds - leaving out the rest of the world of investments. No annuities, ETFs, etc. and the stock and bond markets are accessed via the mutual funds instead of direct investments.
In 54 of the top 55 markets in the country, the average investor now has the ability to walk into a local storefront location to get investment advice. Since most people have access to mutual funds via company retirement plans or IRAs, the use of mutual funds relates well to their experience. The fact that there are no seminar solicitations and easy access (many locations are adjacent to bookstores and coffee shops, for example) to these stores, the problem with inertia and intimidation is removed. There are several people who have heard founder Adam Bold on the radio who have become clients who can talk about the accessibility made it easier to seek advice.
Harrison Miller, managing partner at Summit Partners (a PE firm that invests in financial service firms); customers of investment service firms can't endorse their service providers.
SmartMoney (May 2006 issue); Inc. Magazine (December 2007 issue)
Adam Bold, founder of The Mutual Fund Store (he also serves as the Chief Investment Officer of his firm's investment research arm).