A New Look Over An Old Fence

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.