Why NEO Connect deal is "game-changer" for advisors

Software deals opens up distribution platform to MFDA advisors

Why NEO Connect deal is "game-changer" for advisors

A deal that gives MFDA advisors access to funds distributed on NEO Connect has been called a great leveller for investors as ETFs and PTFs jostle for supremacy.

Univeris will integrate NEO Connect into its wealth management software, which is utilized by 15,800 MFDA advisors representing more than $178 billion assets under management. It’s expected to go live in Q4.

Jos Schmitt, CEO of NEO Connect, said it puts these prospectus mutual funds and private funds on a similar level to ETFs and said that MFDA advisors will now have more choice at less cost, which will “ultimately give the investors a better outcome”.

The NEO Connect prides itself on allowing manufacturers to offer and manage funds at a lower price than Series F funds. This was already open to IIROC dealers and their advisors but later this year the MFDA community will now also have this option.

Schmitt said: “The biggest thing is it means [an advisor] gets access to a very simple, straightforward product where you don’t have any constraints due to size; you buy one unit or you can buy 1,000 units.

“You don’t have any bells and whistles but you have the benefit of one price for everyone and the price today for the provider and the fund managers, who are leveraging our platform, is better than the pricing of Series F.

“So that is what your investor wants to see. They want to get access to those products, they want access to active management in the most efficient way possible and now it puts these funds on a very similar footing to ETFs because ETFs are not just passive, they are moving into the active phase but that means fees are a little bit higher. We brought the fees down.”

Schmitt said the deal – which he called a “game-changer” - had been in the works for some time and the timing was not related to any specific market conditions. However, he said it was clear from the correlations in the second half of last year that the pure beta approach was starting to get risky and a more active strategy was needed to generate alpha.

He said: “[With this deal] you don’t have that view that in one world your ETFs are extremely low cost and on the other world you have mutual funds that are expensive, and more difficult to access and work with. It’s a good example of levelling the playing field and for us showing our commitment to all investors without any limitation.”


Related stories: