Ignites: Can Virtual Wholesaling Succeed with FAs?

YourQ&A: Can Virtual Wholesaling Succeed with FAs? published on May 12, 2009 in Ignites.com

Question
Does virtual wholesaling work? What are its challenges? What usually leads to failure? Investment Executive, Top 200 Firm, Northeast

Answer by Dan Sondhelm, partner and vice president at financial services marketing firm SunStar.

Virtual wholesaling can be an excellent way for smaller firms to develop strong distribution to compete with the larger players. This alternative method for distribution can also help larger firms scale back their spending while still getting results. Keep in mind there can be drawbacks to the strategy. In general, virtual wholesaling requires fund sales professionals to use technology to communicate with advisors in a structured and timely way to attract and retain investors, while building brands.If you don’t have commitment from the top, it probably won’t work.

Be sure to show the CEO that strengthening distribution will help you become more profitable by keeping travel and entertainment costs under control. For smaller firms, show the top brass that a virtual distribution program, as much as it may cost, is more cost efficient than staying small, especially if you have a good story to tell.Investment companies will succeed by employing virtual wholesaling techniques that are strategic and integrated.

Think long-term and build a structured program that combines lead generation and client retention. Consider a strategy that includes the following: a monthly message about your portfolio, a monthly e-mail to advisors, a quarterly conference call for advisors, and generation of media coverage for credibility. These items shouldn’t be in a vacuum. You can promote your press coverage and conference calls in your e-mails. And post these on your website.

Also, funds won’t benefit from this approach if their website looks like a brochure. Consider adding sections that focus on communicating with advisors in a timely way, such as a press room that displays key facts about your firm, access to media coverage and press releases, and contact information all in one place. Also, teasers of press coverage should be on your home page so the news isn’t buried. Further, monthly commentaries and webcasts should be archived.

In addition, if you are not mining the data, it probably won’t work. The best part of technology is that you can communicate with thousands of people very inexpensively. You can also track the results to give personal attention to those key advisors. For example, look to see which advisors opened and spent time with your e-mail. Find out which links they clicked on. For webinars, you can see who registered and who actually attended, and for how long. These would be ideal advisors to personally call on or visit.

Click here (subscription required) for the full story including the additional answer to the question from my friend Bruce Johnston from DBJ Associates.