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Rating:Principal Cuts a Fund Channel on NYE Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, January 5, 2017

Principal Cuts a Fund Channel on NYE

Reported by Noah Zuss

Principal Global Investors has eliminated its dedicated institutional RIA channel and shifted coverage to a broader team, MFWire has learned.

Timothy Hill
Principal Funds
Executive Director of Distribution
Tim Hill, executive director of distribution for Principal Funds, explained the decision:

Specifically, we made the decision to dramatically expand our coverage model for RIAs, which was previously handled by a four-member team. We now have 50 senior directors taking responsibility, including several institutional wealth management specialists who serve certain segments of the RIA market. This provides better coverage than our previous model of having a small team of dedicated RIA wholesalers.

Word is that 22 Principal employees, three dedicated to the RIA channel, were downsized effective December 31.

"The firm gave everything south of $500 million to the retail channel," a source familiar with the situation tells MFWire. That source put the reorganization in the context of friction between the retail and institutional channels.

Hill says that "the RIA channel is a critical part of our growth strategy," and the "changes provide a stronger service model going forward." He adds that Principal Funds is among just a handful of actively managed funds to achieve "positive net cash flow in 2016."

One source placed Principal's change in context of the impact of the expected DoL fiduciary rule, which Hill also touched upon.

"Both the industry and the regulatory landscape are changing at a fast pace, along with converging advisor business models to meet the shift to advice for a fee," Hill tells MFWire.  

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