Ok, perhaps that is a dramatic title, but the asset management wholesaler world is evolving and the forward-looking odds are not favoring the wholesalers. Every wholesaler I talk to mentions the same headwinds:
- It has never been tougher to get meetings
- FAs have never been more reluctant to commit to doing business
- It is too difficult to position my strategies against passive, low fee products
The headwinds are getting stronger and showing no signs of letting up.
How did we arrive here?
- Products are a commodity – According to a recent study there are over 79,000 Mutual funds (just mutual funds) in the world. I would “politely” argue that it is next to impossible to distinguish your strategy in such a crowed space.
- Access to information – It is very difficult to provide product information that FAs cannot access themselves.
- Passive tends to win the “argument” – Why? Because the industry has become too fee sensitive – God forbid we focus on net performance (over full market cycles)
- The bull market has caused too much complacency – The reality is that it is probably the best time for advisors to distinguish themselves and gather assets, but it is much easier to sit back and collect fees.
One of the basic TRUTHS that I learned very early on in my career is that there are only two ways to distinguish yourself: your products and your services. Unfortunately, the product side of that equation has rapidly deteriorated due to many of the items listed above.
So, your “value-proposition” really comes down to service. You have to provide a higher level of service than your competitors’. Think of the best service providers (American Express, Ritz-Carton, etc.) and what do they have in common? Tremendously high levels of engagement and delivering beyond expectations.
So how does this apply to wholesalers? Please realize that I am assuming that the wholesaler already processes strong: communication skills, relationship skills, understanding of the capital markets. If not, then you should not be in this business!
High level of engagement – This is the easy one. This is a 24/7 industry and you need to have that level of engagement and responsiveness. Unless you are sleeping, any response time less than six hours in unacceptable. You always need to make sure the FA knows you are aware of his or her request/question and that you are working on it. Provide them with periodic updates on the progress of their request – in other words, over-communicate and make sure you are managing their expectations throughout the process.
Delivering beyond expectations – How is this done?
- Present yourself as a team full of resources. It’s you, the internal, the product specialist, the regional manager, the sales manager, etc. The more people that are involved in the relationship the more the FA will view “you” as a resource that brings depth to the relationship. Is your sales manager calling-up your top producers to say “thanks” and let the advisors know that they can call them any time? Probably not, but it would go a long way.
- Content: What are you telling FAs that they can’t learn on their own? Not mutual Fund fact-sheets, but content that isn’t readily accessible…or, even better, that helps them grow or retain assets. Give them sales ideas, let them know what other successful advisors are doing or provide them with industry data that they don’t have. When I was presenting to FAs I would try to take a few minutes to review industry flow data – which categories were raising money versus those in net redemptions. FAs loved hearing this information and I had access to it while they did not.
- Another example of content is when there is a change in the portfolio (stock change, allocations change, etc.) This activity is a great reason to pick up the phone and notify each advisor. You are providing them with timely information that they cannot access on their own. Plus, it is a great reason to have another “touch point” with purpose; rather than just checking in. Simply put: if you provide good content then the FA will want to see you, and probably recommend you to other FAs (which is the ultimate sign of a great relationship).
- Personal touches – we all know that little things go a long way. A handwritten letter, a birthday text, a congratulatory bottle of wine, etc. Unfortunately, we notice them when we receive them, but we tend not to incorporate them into our own daily activities. Simply “liking” something on LinkedIn is not a personal touch. Taking the time to thoughtfully respond in the comment section will be remembered.
The truth is that people will incorporate and justify your strategies provided the see the value you bring to the table. If you are delivering superior service and they view you as integral part of the “buying process” then they will easily justify any shortcoming of your strategies.
Regards, Jeff