Capital Group's American Funds needs to go the extra mile to build relationships with RIAs. InvestmentNews reports that data from Cogent Research's just-released Advisor Brandscape 2012 revealed that broker-dealers ranked the fund company first or second when it comes to brand recognition.

Meredith Rice, senior director at Cogent, said: "American Funds is top-of-mind when it comes to brand equity. But they're less likely to be on the mind of RIAs."

Cogent's report noted that only 15 percent of RIAs think of American Funds when they want to make new investments for their clients. This stands in sharp contrast to the more than 50 percent of regional brokers and 48 percent of independent brokers who put American Funds at the top of their lists.

According to Cogent, this mindset could be affected by the thinking that American Funds is a load family.

Chuck Freadhoff, American Funds' spokesman, explained:

"People think of American Funds as this old-load family, when you do something for 70 years, it's hard to change people's thinking."

Fee-based advisors, which comprised almost 56 percent of Cogent's surveyed RIAs, shy away from load fees. Ironically, American Funds also has no-load fund versions that are better investment options.

Freadhoff said American Funds executives want to publicize their no-load funds.

"This is a message we want out. We've been talking about it for 10 years," he said.

However, not all fee-based RIAs are convinced that the fund has done its best to get the message out.

Melissa Joy, partner at the Center for Financial Planning, said:

"It seems like they're really straddling the line between the clients who made them who they are today and the RIA space. Other firms really want to focus on the RIA space."

With two-thirds of advisers projected to adapt fee-based models by 2014, American Funds would be prudent to make headway in the RIA space.  

Edited by: HFD


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