The panel “Deciphering Wholesaling Models” was led by Todd Buck, Senior Partner and President at Wheelhouse Analytics; Scott Herrick, National Marketing and Client Service at Becker Capital Management; and Dave Mertens, Managing Director at Jensen Investment Management; and was moderated by Bob Tebeleff, of SunStar Strategic.
Which model is best for you?
Mutual fund firms have always
debated whether to hire a 3rd party wholesaler or to do everything
in-house. Putting your fund’s reputation in someone else’s hands can be
unnerving, and it may not be the right choice for every firm. Our panelists
discussed the pros and cons of each wholesaling model, with the resounding
conclusion that the most important aspect of distribution is doing the homework
to find the appropriate solution for your firm.
According to Dave Mertens, it is important to
know what channels of distribution you are trying to build out before selecting
a wholesaling model. Depending on that information, he thinks 3rd
party can make sense, especially if you are trying to get a product to the
market quickly. Once you’ve decided to use a 3rd party, make sure to
pick the best distributor for your fund by ensuring that they specialize in
your desired channel. Many 3rd party distributors have expertise in
multiple channels, whereas it may be difficult to find an individual who is an
expert in every channel. Doing the legwork up front to select a 3rd
party partner that matches your firm’s goals can make the difference between a
great partnership and a relationship that doesn’t work out.
Scott Herrick is a proponent of
keeping wholesaling in-house. By hiring people directly who can grow into the
position, firms keep more control over their messages and put a spotlight on
their funds, where a wholesaler may not be able to give every product the
attention it deserves.
Todd Buck mentioned that with
either model, it is important to make sure that the salesforce has a plan,
especially if it is through a 3rd party. Sales people need to be
prepared with good questions to ask advisors. It is vital for the firm’s
management team to work with the wholesalers to develop a strategic plan that
will represent the firm’s messages.
Optimal wholesaling effort
Ideally, your firm would have
wholesalers in many geographic areas, said Herrick. However, many small firms
don’t have the budget for that breadth of coverage. Mertens believes that a
firm should focus primarily on its current clients and geographic area. Smaller
fund companies need to know exactly who is buying their products in order to
optimize their sales strategy. Hiring internal wholesalers who are managed by a
senior executive to identify and target clients and prospects may make the most
initial sense for a boutique firm. Once internal staffing has gathered strategic
client data, it may be most efficient to hire an external wholesaler to develop
and enhance business relationships.
Use of technology
According to Buck, the sheer
amount of data that is available today represents one of the biggest recent changes
in the mutual fund industry. The downside to all of the available information
is that it is challenging to identify exactly what data is needed to pinpoint
who is buying your funds. Identifying inflows, redemptions and net flows by
channel can be a daunting task for an internal team, but services such as RIA
Database, Celera Systems, Meridian-IQ and Discovery Data—to name a few—can
provide the crucial data that your sales people need to target advisors who are
buying your funds. Integration with marketing
Herrick mentioned that having a consistent brand, image and message is essential for any firm, even before trying to get on distribution platforms. Many firms waste a lot of money on materials produced without incorporating strong messages, making it less useful in the marketing process. Firms need to be more focused on finding out what pieces of content are useful to their advisors and consultants and producing those pieces to support and strengthen their brand.
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