When dealing with wholesalers, retail advisors gravitate either toward technology or traditional face-to-face contact based on the distribution channel in which they sell, according to a new study.
Registered investment advisors (RIA) are more willing to engage wholesalers using technology. Meanwhile, full-service advisors in the wirehouse and independent broker-dealer channels prefer engaging through traditional face-to-face contact, the research found.
“Younger advisors are still looking for face-to-face contact, especially those in the full-service and independent channels,” said Howard Schneider, principal of Practical Perspectives and author of the study on the changing wholesaler landscape.
“They are more likely to deviate based on channel, not on age,” he said.
Simply mapping a technology model to reach a broker-dealer advisor or, conversely, just porting a full-service model onto tech-leaning RIAs, isn’t going to work and there’s no single model of success, Schneider said.
The research, distilled from an April survey conducted with 750 financial advisors working for national broker-dealers, independent broker-dealers, wirehouses and RIAs, also found that:
- Successful wholesaling is very often driven by the individual wholesaler, not the firm’s approach to wholesaling.
- The volume of wholesaler outreach may be overwhelming for some advisors, especially from providers advisors don’t currently work with.
- Advisors want a more relevant and tailored approach to wholesaling.
The report sheds light on how advisors perceive and rely on wholesaling outreach from asset managers, annuity providers and other firms that depend on advisors for distribution.
Characteristics of Top Wholesalers
Advisors prefer wholesalers who respect their time, don’t intrude and exhibit in-depth knowledge about their products as well as solutions offered by competitors.
Like many investors, advisors don’t like surprises and told a solution doesn't perform “because it means a more difficult conversation with the client,” Schneider said.
Pushy wholesalers touting their latest and greatest funds best stay away, said Kenneth Nuttall, director of financial planning for BlackDiamond Wealth Management, a New York-based RIA.
The soft sell is more effective and wholesalers are beginning to see that, he said.
If a conversation with a wholesaler ends with a subtle reminder to check out a fund, Nuttall relies on a Google search.
But the most valuable wholesalers are those who give him information he can't find on the Internet, Nuttall said.
Specialist wholesalers who represent specific types of solutions -- rather than generalist or unaffiliated wholesalers -- score higher among advisors, the research found.
Wholesalers with deep industry knowledge and who take the time to establish personal relationships and provide access to practice management resources enhance their value in the eyes of advisors, the report found.
Email and phone calls remain the most typical forms of wholesaler contact with more limited outreach conducted through digital approaches, the report found.
Firms With Best Wholesale Support
Many wholesalers are trying to grow relationships through coaching or counseling on best practices, developing social media and connecting advisors to big investment institutions.
Asset managers like PIMCO and Natixis apply advanced tools to stress test and model drawdown scenarios on client portfolios, said advisor Glenn Moore with Gibraltar Financial in Pinehurst, N.C.
“For us as a boutique advisor we don't have the same technology and they will partner with us and serve as a sounding board,” he said.
While the characteristics of individual wholesalers, the way they approach their jobs and the relationships they cultivate with advisors matter most, the support of channel-specific asset management firms and annuity companies also helps, the research found.
In the full-service channel, American Funds, First Trust, Franklin Templeton, BlackRock/iShares, Jackson National, Lord Abbett, Prudential and Eaton Vance were the most effective at providing wholesaling support.
In the independent channel, Jackson National, American Funds, Prudential, JP Morgan, Fidelity, Franklin Templeton, Frist Trust and AIG and Allianz were rated most useful, the report found.
Among RIAs, BlackRock/iShares, Vanguard, American Funds, JP Morgan, DFA, Fidelity, Jefferson National and TD Ameritrade were top-rated, the report also found.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]
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