Close Close

Industry Spotlight > RIAs

RIAs Don’t Want a Traditional Wholesaler Relationship. Try ‘Robo-Wholesaling’

Your article was successfully shared with the contacts you provided.

Is it time to forego the traditional wholesaler and advisor relationship?

According to a new research report from Practical Perspectives, the traditional wholesaler/advisor model that has been highly successful in mining and developing other distribution channels such as wirehouse or independent broker-dealers has shown to be less useful with registered investment advisors (RIAs).

Practical Perspectives suggests that product providers, distributors and custodians must adopt a new digital-based strategy in order to build deeper relationships with RIAs. It calls this new strategy “robo-wholesaling.”

“Robo-wholesaling is essentially a metaphor to describe the development of a digital-focused strategy that captures many of the positive characteristics of the traditional wholesaler and advisor relationship,” Rich Gauger, co-author of the report, said in a statement.

There’s also a huge opportunity for wholesalers among RIAs given the growth and activity of this market segment.

Practical Perspectives is calling the growth in RIA firms “nothing short of dramatic” – largely in part due to the ongoing “breakaway” trend of advisors leaving brokerage firms and being recruited by existing RIA firms or creating a new RIA as a solo practitioner or team practice.

According to the report, there are now more than 11,000 firms registered with the Securities and Exchange Commission and an additional 20,000 state-registered firms with average assets under management of $67 million.

Many RIA firms are solo practitioners with fewer than 100 clients, but there has been significant growth among the larger RIA firms with an estimated 500 firms managing over $1 billion in assets, according to Practical Perspectives.

The report, which is based on proprietary research conducted with more than 1,000 RIAs, finds evidence among these RIAs that wholesalers will need to change in order to meet the preferences and complex needs of this growing segment of advisors.

For example, the report finds that RIAs have significantly less interest in marketing and sales support (including traditional wholesalers) than other advisors.

The report also finds that – contrary to other advisors who are often trained by wholesalers – RIAs are more oriented to conducting their own research and participating in webinars or conference calls.

RIAs are also more tech-savvy than other advisors. According to the report, roughly 2 in 3 RIAs find websites and web-based support as critical aspects of marketing and sales support they receive.

This is why Practical Perspectives is suggesting that there’s potential for firms to leverage a digital delivery approach to tailor support to RIAs.

Gauger further explained the idea of “robo-wholesaling.”

“It requires the successful integration of the many digital tools available to product providers and distributors,” he said in a statement. “If designed and implemented successfully, firms can simulate many of the objectives of successful wholesalers such as learning about an advisor’s business and providing personalized and customized service.”  

This robo-wholesaling approach would provide a customized and personalized experience through the optimization of CRM, digital resources, marketing content and sales intervention when requested.

“Many are likely to immediately discard the robo-wholesaling concept as one which has little chance of having success because it lacks actual personal interaction,” the report states. “But if we step back for a moment, we should realize that we form brand perceptions and connections with many product categories (e.g. cars, food, clothing) without any interaction with representatives from the brands themselves.”

While the option to meet or speak with a field or inside wholesaler respectively should always be an available option under this robo-wholesaling concept, the report also argues that there are many ways to inject human personality digitally.

An integrated digital-based strategy with a CRM connected and optimized with email, web domains, and other technologies such as webinars, videoconferences, teleconferences and podcasts is capable of replicating the objectives if not the “human” element, according to the report.

“Providing RIAs with what they want, when they want it, and in the desired format is a competitive advantage that will help build the requisite loyalty and relationship that ultimately results in incremental business and market share.”


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.