A recent report by Cogent Research shows there has been a shift in advisors' commitment to their current fund companies. In its 2011 Advisor Brandscape report, the research firm reported on advisor trends and product usage among 1,643 retail investment advisors across all major distribution channels.
Compared to last year, it found that T. Rowe Price and Legg Mason experienced the biggest gains in overall advisor commitment. The Hartford, Dodge & Cox, and Eaton Vance all lost significant ground relative to their respective 2010 rankings. J.P. Morgan Funds ranked second overall behind Dimensional Fund Advisors, which placed first for the second year in a row.
Cogent Research bases its mutual fund provider commitment scores and rankings on advisor loyalty to their current providers and their anticipated future investment with those advisors. Individual results across all 24 providers included in the ranking are indexed, and then separated into four groups: Stars, Leaders, Players and Drifters.
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According to John Meunier, Cogent Research principal and co-author of the report, these results not only reflect where providers stand today among the advisors they serve, but point to how momentum is shifting across the provider landscape.
"Last year, DFA and BlackRock were the only Stars in our mutual fund company commitment ranking," said Meunier. "This year, a total of four firms made it into the top tier, and the gap between DFA and the rest of the pack has narrowed substantially."
The study also shows use and dependence on mutual funds has grown over the past year, after several years of declining interest. The percentage of users is up from 95 percent to 97 percent, and the overall average advisor allocation to mutual funds (as a percentage of total book) rose from 35 percent to 39 percent.
Half of all the advisors using mutual funds say they expect to be less dependent on these products in two years.
"It's obvious, the competition for market share and advisors' attention will only intensify over time," said Meunier. "So, building loyalty and momentum today is a simple matter of survival."
Founded in 1996, Cogent Research provides custom research, syndicated research products and evidence-based consulting to leading organizations in the financial services, life sciences and consumer goods industries.
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