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Wholesalers: The Whole Truth

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What do financial advisors really want? (Ask yourself what you really want.) And how can they get it? To help answer these questions, CEG Worldwide regularly conducts extensive research on financial advisors. Most recently, our groundbreaking 2007 study surveyed 2,094 financial advisors across all three channels — registered investment advisors (RIAs), independent broker-dealer representatives (IBDs) and wirehouse stockbrokers.

When asked what they were looking for from financial institutions, advisors replied: 1) high-quality investment products, and 2) help becoming more successful. Interestingly, these were the same two responses found in our 2003 study. However, as the table nearby shows, while 2.4 percent of RIAs said they were concerned with finding high-quality investment products in both 2003 and 2007, for IBDs the percentage went up nearly 15 times between 2003 and 2007 (from 2.5 percent to 37.2 percent), and for brokers the percentage increased from zero percent in 2003 to13.9 percent in 2007. Across all three channels, an average of 1.3 percent of advisors in 2003 said they were interested in finding high-quality investment products, but by 2007 that number had increased to 18 percent, about 14 times greater.

What happened between 2003 and 2007? Well, we had a mutual fund scandal, the collapse of certain hedge funds, and the beginnings of the current mortgage and credit crisis. Taken together, these events have decreased advisors’ confidence in the quality of investment products available and increased the time they must spend doing due diligence.

Advisors have also consistently told us that they need help in becoming more successful, and that to be more successful they need support with sales and marketing, practice management and technical issues. For example, in our 2007 study, 90.4 percent of advisors told us they wanted help with developing client referrals, and 89 percent said they wanted to learn about the best practices of elite advisors. Areas where advisors said they wanted more technical support include life insurance, retirement planning, restricted stock and concentrated positions, and retirement distribution and income planning. Additionally, advisors frequently indicated that they desired help with:o Finding wealthier clientso Generating significant asset growtho Countering competition for wealthy clientso Forging strategic alliances with other professional advisorso Obtaining needed resources

Who You Gonna Call? Advisors wanting greater success need better information, support and relevant implementable training in the above-mentioned areas. Unfortunately, all too few advisors act on their concerns, partly because they don’t know where to turn. Who, then, should advisors call on to make sure they get what they need? Clearly, the institutions best positioned to provide what’s desired here are broker-dealers and investment product companies, as well as the internal and field wholesalers who work for them.

But many wholesalers don’t see assisting advisors in this way as being a core part of their job description. Wholesalers are generally trained to assist advisors with the sale of their products, but not much more in terms of practice management support. To get what you need, then, you’ll have to change the way you work with wholesalers.

First, stop looking at national and regional conferences as good times where you can sit by the pool and collect tchotchkes. Instead, get involved in planning the agenda and demand that the sponsoring broker-dealers and financial institutions bring effective training and best-practices information addressing the areas mentioned above. Second — and here’s the real key — you’ll have to learn how to effectively identify and work with the right wholesalers.

Finding the Right WholesalersAs with conference content, you’ll need to shift away from collecting golf balls and T-shirts and instead insist that the wholesalers you work with provide you with real, relevant and implementable strategies and support. But will such insisting do any good? Having been a wholesaler, having hired and managed wholesalers as a national sales manager, and having been the chief marketing officer for an investment company, I can assure you that many wholesalers are ready, willing and able to assist you. Still, you’ll have to kiss a lot of frogs to find your princes and princesses.

Use this three-step process to shorten your search: o First, start with the end in mind: Know exactly what you’re looking for in a wholesaler, including the characteristics or capabilities they must have to most effectively assist you. o Second, put an efficient process in place for choosing the right wholesaler(s).o Third, get the most from your wholesaler relationship: Make your choices, give it a good go, and then evaluate whether you’ve chosen well.

Ultimately, you want someone who understands you, who can assist you in marketing to the affluent, and who can offer knowledge well beyond his or her own products.

Getting the Most from Your Wholesaler RelationshipWork closely with the wholesaler(s) you’ve chosen, but start with a small project so you can quickly evaluate the wholesaler’s merit. Tell the wholesaler that you need assistance, education, or support on a specific issue, and then ask, “How can you help?” While most wholesalers will readily support public seminars and speak at them, this is not the route to countering competition, finding wealthier clients and moving up-market. You want wholesalers who can give you specific support on what you need, and public seminars are generally not effective in reaching the affluent.

Remember, too, that any great relationship is based on mutual understanding and agreed-upon expectations. A wholesaler who assists you in becoming more successful will expect to do business with you, so don’t select wholesalers whose products you won’t use. They may come in once or twice and teach you some things, but if they don’t get any business, they’ll soon disappear.

Ultimately, it’s not just that good advisors are looking for good wholesalers, but good wholesalers are also looking for good advisors. Wholesalers are expected to have roughly five appointments five days a week, so they too must find ways to make efficient use of their time. Quality wholesalers only want to meet with advisors who won’t waste their time, so the very fact that you’re putting forth specific criteria and expectations will show the wholesaler that you respect his or her time and desire to achieve excellence.

Finally, our research shows that roughly 60 percent of advisors do substantially more business with investment companies when they receive value-added marketing support from a wholesaler. So by working closely with a great wholesaler — setting forth mutually agreed-upon expectations and providing ongoing feedback to each other — you will benefit, the wholesaler and investment company will benefit, and your clients will benefit as well through better access to quality products and investment strategies. This is a win-win-win situation that begins when you get clear about what you most need to help your clients, and moves into high gear when you learn to effectively ask for such help from the best wholesaler(s) you can identify.

Patricia J. Abram is a senior managing partner with CEG Worldwide in Florida; see


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