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Practice Management > Building Your Business

The 7 Deadly Sins Of Wholesaling

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Distribution companies live and die by two things: their products and their sales talent. Our experience shows that all-star wholesalers–the ones racking up more than $200 million in annual sales–have the ability to reach their sales goal without relying on a superior product or a new campaign. Indeed, too many wholesalers get caught in the “product trap.” Sales managers shouldn’t have to listen to this eternal refrain from their salespeople: “If we only had a better [insert mutual fund style or annuity product feature here], I could sell more.”

The first step is to recognize that all wholesalers can improve their productivity. What holds them back are common sins, ones we see all the time, ones that are all too easy to make for even the most experienced wholesaler. Here are the seven most deadly sins of wholesaling.

#1 Failure to understand the value of strategic business planning. Wholesalers complete business plans as an annual exercise for themselves and sales management. Most often the plan is not a plan but a list of goals and tactics minus any formulated actions to be followed. What’s worse, when a business plan is completed and turned in, it may rarely be referred to again. Wholesalers don’t understand how a well-thought-out strategy is the foundation on which all actionable business plans are based.

Wholesalers often mistake tactics for strategy. Teaching wholesalers strategy allows them to build effective business plans that identify essential actionable tactics.

#2 Failure to leverage target market concepts. Target marketing to most wholesalers means frequent contact with their top producers and seldom contact with their bottom producers. They fail to understand that proper advisor segmentation also means creating a “service matrix” that dictates service levels appropriate to the level of sales they receive from segmented advisors. The most successful wholesalers aren’t afraid to provide more services to some and less to others.

Target Market Strategy: Teach a wholesaler how to develop a target market strategy through segmenting clients and developing a service matrix. Combine this with the necessary tactics to serve each market segment fairly, effectively and profitably.

#3 Setting undoable goals when planning territory travel and advisor visits. What wholesalers plan to do and what they actually do are often two different things. For instance, wholesalers say they plan to see their top selling advisors once a month. Noble indeed! However, often enough wholesalers fail to consider that some of their top advisors may be located in parts of their territory that they travel to only once a quarter. Obviously, there’s a gap in the wholesaler’s plan.

Territory Management Strategy: Developing a sound territory management strategy is critical and requires analytical tools to help a wholesaler gather territory data, examine experience and test assumptions before setting objectives and planning travel.

#4 Neglecting to hone public speaking skills. Too many wholesalers rate themselves very highly on speaking skills but in reality struggle to produce a C+ group presentation. Most wholesalers often get bogged down in the minutiae of a product and fail to deliver what advisors are looking for: a repeatable story for their clients.

Group Presentation Strategy: Group presentation training should focus on advisor and client concerns rather than how to spew out product information. Tactics incorporating repeatable stories that address facts should be integrated into point of sale presentations.

#5 Conducting mediocre one-on-one meetings with advisors. Most financial advisors cringe at the dreaded “walk-through,” where the wholesaler stops by the advisor’s office and proceeds to waste 30 minutes talking about a product that does not meet his clients’ needs. Wholesalers need to understand that advisors are not interested in products. Instead, advisors want help in areas that will grow their business, such as prospecting for new clients, increasing customer satisfaction and improving productivity. The product is only valuable to the advisor if it provides solutions to these and other key advisor needs.

Advisor-Focused Sales Strategy: Learn about the advisor’s business first. Teach a wholesaler how to conduct an effective advisor interview. A good interview exposes the wholesaler to the advisor’s problems and his clients’ needs. This allows the wholesaler to offer solutions and become a valuable member of the advisor’s team.

#6 Failure to develop differentiating core competencies. Top wholesalers are valued by advisors because of their core competencies not because of their company product. Great wholesalers are trusted consultants to advisors and differentiate themselves by becoming expert in areas such as estate planning, annuity contract structure, public speaking or by demonstrating their general wisdom in difficult markets.

Core Competency Strategy: Wholesalers must be trained in how to become a long-term, value-added resource to an advisor by finding an expertise that creates a niche in their territory.

#7 Poorly managing their expense budgets. A wholesaler typically controls a budget of $50,000 to $100,000 annually, yet fewer than 25% of them prepare an annual budget! Most often, they simply spend and make commitments throughout the normal course of their territory travel and then wait for the company’s accounting department to tell them how much they spent and what they have left. This usually leads to ineffective, non-strategic spending throughout the fiscal year or worse, a shortfall of money in the second half of the year when a key strategic event needs to be planned.

Expense Management Strategy: Annual budgets should be developed in coordination with the strategic plan. By applying the use of analytical tools, such as those used in segmentation and service matrix tactics, wholesalers may effectively link their strategy to their budget, resulting in the more efficient use of marketing dollars and return on investment.

Not recognizing the seven deadly sins of wholesaling and their effect on business will contribute to slumping sales. But after all, even major league ballplayers experience slumps now and again. Professional wholesalers in the annuity and mutual fund game are no different. A major leaguer has at his disposal resources like a team trainer, a batting coach or a manager to help him get back on track. The same should also apply for wholesalers. Distribution organizations need to invest the time and resources to coach their wholesalers with the latest techniques and tools available. Developing the right strategy and tactics takes focus and practice. And often, a little help from a coach.


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