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A New Look Over An Old Fence

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At the firm I lead, we periodically get calls from brokers who want to switch careers, possibly to become a wholesaler. The calls typically pick up during bear markets.

Some advisors imagine that wholesalers enjoy cushy lives: big base salaries plus fees for new assets, dinners on the company tab, golf outings, and other perks. Why struggle with disgruntled clients or trying to win new ones?

Each and every time, I try and correct this view not in terms of the wholesaler lifestyle -these road warriors hardly lead glamorous lives – but also about the riches, which began to evaporate long before the current market downdraft. The situation is only becoming worse. The market offers better options for advisors who are uncomfortable with their current situations, so let me explain how wholesaling has evolved over the past decade and a half.

When we began working with asset-management firms, they eagerly sought brokers who could sell products to their former colleagues. No more.

The wholesaler has a new job description, and experience as a financial advisor is no longer an essential or even desirable part of what the firms are looking for.

Furthermore, the appetite for experienced external wholesalers is on the wane. Firms are now seeking “hybrid wholesalers:” junior sales-support staff members that get hired from a sales support desk. The hybrids spend just one week a month on the road versus the four-day a week burden of the traditional wholesaler.

The pay scale for the hybrid wholesaler is consequently much more modest than that of its traditional counterparts, up to $150,000 per year including base salaries that range from $45,000 to $65,000.

Asset-management firms still need a handful of traditional wholesalers, but the pay has come down dramatically. I find that many brokers are still dreaming of the $600,000 to $1 million packages that their former colleagues earned during the heyday of mutual fund company wholesalers. That was more than a decade ago.

Even during the height of the market exuberance, the best wholesalers at the major fund companies topped out at maybe $600,000. More recently, experienced wholesalers have been earning $250,000 to $400,000.

The grim news doesn’t stop there. Financial advisors hoping to break into the wholesaling field now face stiff competition from highly experienced professionals who were let go during the recent rounds of massive layoffs.

Many of those jobs will never return, as managers discover that they can manage the wholesaling function much more cost effectively with fewer external wholesalers, more hybrid salespeople and sophisticated technology. Plus, model portfolios that are run by home offices are hastening these trends by reducing the need for wholesalers to explain the investment process of individual managers to advisors.

I recently spoke with a survivor of the industry who explained to me that this year he was not expecting to raise any new assets from clients. He is dedicating this annus horribilis to relationship building. I didn’t bother to ask him how much money he expected to make. He was simply glad to still have a chair at the table.

I fully believe that financial advisors command a unique power in this dreadful market: They control assets and therefore their own destinies. Some firms have pulled away the welcome mat to advisors who bring in less than $500,000 in commissions per year. But for every firm that backs away, more are filling the void. In this job market, that’s a place many people would want to be.

Mark Elzweig is president of Mark Elzweig Company, Ltd., ( an executive search firm that works with financial advisors and the asset management community.