In my last Blog, I highlighted how difficult it was for sales folks to get meetings, and I received many “thank you” responses for acknowledging the headwinds they face daily and weekly. During a routine follow-up conversation, one wholesaler had a very interesting observation. She said, “why would anyone want to meet with me when I have nothing new to show them?” She further explained that her firm has over 100 “sellable” products, which are ALL similar to everyone else’s line-up. While she might have some decent 5-star funds to represent, there is nothing to differentiate her and act as a catalyst to meet face-to-face.
Perhaps you have some different products, but are they distinguished because of performance (which won’t last) or because your firm was first-to-market something that was a compelling and timely story? When I first arrived at AMG Funds, I inherited a very innovative product. We rolled out a Private Equity Interval Fund, and, at the time, there was only one other competitor. The problem was getting the Fund available on the various platforms (Schwab, Fidelity, Morgan Stanley, etc.). This, coupled with the lengthy application process, frustrated a lot of internal folks. As my mentor (BM) always said: The key to success is knowing how long it will take to succeed. AMG officially rolled out the product in 2014, and I recently saw a LinkedIn post celebrating it had surpassed $1.5 billion in AUM – Congrats! To this day, the product has very limited competition but provides access to “real” PE for qualified investors.
Everywhere I have worked, we have had success by selling something that was “difficult” to sell. We always positioned the product as a “solution” to an issue that the Advisor community either did not identify or did not embrace. Very few shops currently offer a Private Equity Interval Fund (AMG, VOYA), and I know they are gathering much attention and interest; for all the right reasons. I mean, who wants to be correlated to the markets right now?
When I advise Asset Managers about new product development, the first thing I tell them is to stop incubating and rolling out Mutual Funds. If you are fortunate, your firm already has an ETF platform, which should be its primary conduit for new products. ETFs are a better solution, given they are more accessible, liquid, and tax efficient. I really do not know why any firm would introduce a strategy in a Mutual Fund wrapper unless the manager was “anxious” about disclosing the holdings on a daily basis (which seems nonsensical at this point).
So, Asset Managers need to start providing better ETF solutions that will help the sales folks distinguish themselves. Or create interval funds that provide real Alternative solutions. Given my current employment status (teacher making < $30k per year), I need to generate income through my investments. Virtus Investment Partners has a unique solution – an ETF that invests in Preferred Equities and utilizes leverage to “juice up” the income. PFFA is a great product that should help the wholesaler get a solid meeting. Van Eck’s ETF (BIZD) invests in Business Development Companies (BDCs). This also generates an attractive yield and is very unique to the marketplace (plus no K-1s). JP Morgan has raised over $20 billion in an income-producing, covered call strategy (JEPI).
So, please stop rolling-out products that don’t help the sales folks get meetings, and please stop getting mad at them for having empty calendars. It’s not that they don’t want to work, but rather you aren’t giving them something compelling and distinguishing. Instead, be creative and start solving problems.