Cincinnati-based asset manager Touchstone Investments is strategically pivoting under the leadership of its new president, Ben Alge, to capture growth in the burgeoning registered investment advisor (RIA) channel and capitalize on the increasing demand for distinctively active exchange-traded funds (ETFs). This strategic realignment signals a commitment to fostering a more independent, technology-driven advisory landscape and positions Touchstone to navigate the evolving demands of asset management in the coming decade. Alge’s vision centers on deepening relationships with RIAs, who are increasingly seeking partners that understand their independent ethos and demand for bespoke solutions, while simultaneously expanding the firm’s "distinctively active" investment philosophy across its mutual fund and ETF offerings, particularly in crucial areas like fixed income and international equities.
The firm’s deliberate focus on the RIA market is rooted in a perceived natural synergy. Alge articulates that RIAs, by their very nature, are independent thinkers who are intentionally building their practices. This aligns with Touchstone’s own philosophy, which emphasizes a deliberate and active approach to investment management. "Advisors don’t go the RIA route by accident—they choose independence because they want to think differently and build something intentional," Alge stated in a recent interview. "If I were an RIA putting a flag in the ground, I’d want to know that Touchstone understands what I’m trying to accomplish. This alignment has made us an attractive partner." This understanding has driven a recalibration of Touchstone’s engagement strategy, recognizing that many large RIAs now operate with centralized investment decision frameworks akin to smaller wirehouses. Consequently, the firm has restructured its sales approach and augmented its team to provide more targeted support across key strategic coverage points for these sophisticated advisory firms.
Touchstone’s commitment to the RIA segment extends beyond sales interactions. The firm has cultivated a robust practice consulting program over the past decade, equipping advisors with a suite of tools designed to enhance efficiency, scalability, and ultimately, growth. This program has evolved to be data-agnostic, enabling Touchstone to collaborate effectively with RIAs who, despite lacking extensive internal resources for practice management, possess a pronounced need for such support. The overarching lesson from these engagements has been the critical distinction between a vendor and a true partner. RIAs are actively seeking collaborators who comprehend the nuances of independence, can engage at a strategic level, and are committed to cultivating enduring relationships. This is precisely where Touchstone aims to make its most significant impact, building trust through a deep understanding of RIA objectives.
The Distinctive Edge of Active Management
At the core of Touchstone’s strategy is its "distinctively active" approach to investment management. This philosophy differentiates the firm from the proliferation of passive investment vehicles. Alge emphasizes that distinctively active management involves constructing portfolios that intentionally deviate from their benchmarks, with the explicit goal of adding value. This is achieved by granting portfolio managers the latitude to adapt to dynamic market conditions. They can adjust risk exposures, emphasize high-conviction investment ideas, and leverage deep expertise within specific market segments. The accumulated experience of managers who have dedicated years to a particular asset class or strategy translates into meaningful inputs that drive the pursuit of fund objectives. For investors seeking differentiated outcomes, accountability, and robust risk management, these actively managed strategies are positioned as powerful tools.
The active management landscape, particularly within mutual funds and ETFs, has faced scrutiny regarding performance and fees compared to passive alternatives. However, proponents argue that skilled active managers can navigate market inefficiencies and provide downside protection, especially in volatile periods. Data from industry analytics firms like Morningstar often highlight instances where active funds have outperformed their passive counterparts over certain time horizons, particularly in less efficient markets or specific asset classes where alpha generation is more feasible. Touchstone’s emphasis on "distinctively active" suggests a focus on strategies that aim to capture these opportunities, moving beyond mere benchmark tracking to offer tangible value propositions.
Riding the Wave of Active ETFs
The rise of active ETFs represents a significant area of growth for Touchstone. Alge notes a strong and escalating demand from advisors who seek to combine the structural advantages of ETFs—such as liquidity, transparency, and tax efficiency—with the strategic flexibility of active management. This potent combination has resonated deeply within the advisory community.
The areas attracting the most client interest in active ETFs are precisely those where active decision-making is deemed most critical. Fixed income, particularly in the current environment of shifting interest rates, stands out. The ability for active managers to dynamically adjust duration, credit quality, and sector allocations in response to evolving economic conditions and monetary policy offers a distinct advantage. Touchstone’s three fixed income ETFs, for instance, are frequently discussed with advisors looking for strategies to generate income and actively manage risk for their clients. The firm’s focus on fixed income reflects a broader market trend, where investors are increasingly seeking ways to navigate the complexities of bond markets beyond simple index exposure.
Furthermore, Touchstone has observed a resurgence of interest in active ETFs focused on international markets. This segment, which had languished in relative obscurity for some time, is now regaining favor. The appeal lies in the ability to diversify risk away from domestic equities while benefiting from the tax efficiency inherent in the ETF structure. For investors looking to achieve global diversification and mitigate country-specific risks, active international ETFs offer a compelling solution. Touchstone’s extension of its distinctively active approach into the ETF wrapper is a direct response to advisor demand for high-conviction, thoughtfully managed strategies delivered in a portfolio-friendly structure.
The active ETF market has experienced exponential growth. According to data from ETFGI, a leading independent research firm, assets in actively managed ETFs have surged in recent years, indicating a broader industry trend rather than a niche play. This growth is fueled by both the demand for active strategies and the innovation from asset managers in bringing these products to market.
The Future Landscape and Touchstone’s Trajectory
Looking ahead, Alge foresees a future for the asset management industry characterized by continued innovation and adaptation. The fundamental need for wealth investment—to secure retirement, generate income, and foster confidence—remains robust. However, the pathways to meeting these needs are evolving. Technology, particularly advancements in artificial intelligence (AI) and the sophisticated utilization of data, is poised to revolutionize client engagement, needs assessment, and the overall delivery of advisory services. This technological evolution is expected to enhance investment outcomes and broaden access to financial advice and solutions.
The industry is also likely to witness ongoing consolidation. This trend, coupled with a broader shift towards ETFs and more cost-effective, efficient investment structures, will exert pressure on profit margins. Consequently, firms will be compelled to be more deliberate in identifying and articulating their unique value propositions.
For Touchstone, this dynamic environment presents an exciting opportunity. The firm is building upon a solid foundation established by previous leadership, including Blake Moore, who significantly enhanced capabilities, expanded the product suite, and invested in its people. This foundational strength is underscored by a commitment to pursuing excellence and avoiding the "ordinary." As president, Alge’s immediate priority is to sustain this momentum, empower the team, and remain focused on Touchstone’s core strength: delivering distinct, active strategies. This involves a continuous process of evolution alongside the changing landscape.
Leadership Lessons and the Power of Empowerment
Since assuming the presidency last year, Alge has gained a profound understanding of leadership. He articulates that the role fundamentally redefines the concept of "doing a good job." Early in his career, success was often measured by individual performance—outworking, outthinking, and out-executing peers. While this mindset may have facilitated advancement, Alge now recognizes that in a leadership position, the paramount responsibility lies in selecting the right team members and then empowering them to excel.
The most impactful outcomes, he observes, stem from strong team dynamics, trust, and empowerment, rather than individual heroic efforts. When the right individuals are brought together and provided with the necessary support, their collective success becomes the benchmark. Witnessing the team achieve significant results without direct personal intervention is, for Alge, the true indicator of effective leadership and successful execution of his role. This philosophy of distributed leadership and team-centric achievement is likely to shape Touchstone’s strategic execution as it navigates the competitive and evolving landscape of asset management. The firm’s future success will hinge on its ability to foster a culture where individual talents are amplified by collective purpose and strategic alignment, particularly within the growing RIA segment and the dynamic active ETF market.
