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How Portfolio Analysis Transforms Mutual Fund Wholesalers’ Advisor Relationships

Transformation in the wholesaler role started more than 20 years ago. Frankly, for a long time we were stuck doing the same old thing, the same old way, it was hard to imagine a different way of working. The pandemic has exposed new ways to approach the role and has accelerated change to the point where the curve has gone exponential. 20 years ago, the best wholesalers were experts in delivering the product knowledge that advisors needed. But it was up to the advisor to figure how to use that knowledge. Now, advisors are looking for wholesaler assistance in applying product information to deliver more value for their clients. Those new expectations require wholesalers to evolve beyond their traditional approach and find new ways partner with advisors.

Craig Pfeiffer, President & CEO - Money Management Institute; Financial Services Board Director/Advisory Executive

Over the past few years, asset managers have been moving away from a reliance on external wholesalers. The number of mutual fund wholesalers is actually shrinking. The reasons for this change are rooted in changes that have already occurred in other parts of the wealth management industry.

How investment industry changes have disrupted all stakeholder roles

Evolving customer expectations, regulatory change and the emergence of new digital technologies have revolutionized the financial advisor role significantly. The old ways of working are no longer effective. Transactional selling and pushing products are turn-offs for potential customers. The traditional, manual, non-digital approaches to practice management are too inefficient.

Recent generations of financial advisors have had to redefine their role. Their value proposition has also had to shift, in order to remain relevant to their clients, and competitive in their markets.

Advisors have now left behind the old ‘agent’ persona and evolved into true providers of advice to clients.Seeking to add value and build trusted relationships, they embrace the technologies and the partners who can help them get there.

How changes in the financial advisor role create challenges for mutual fund wholesalers

The changes that revolutionized the advisor role, are now disrupting the wholesaler landscape. They aren’t interesting in dealing with wholesalers who are still following a decades old sales model. As one respondent to a recent NAPA-Net Reader Poll put it:

“The wholesaler that gets to know me and my practice, and solves for my needs is the most valuable... not enough good ones out there.”

Today, advisors have no interest in sitting through a dozen product presentations from wholesalers every month. Not, when any information they need is easily accessed online. There’s not enough value in those meetings for advisors.

The difference between the traditional wholesaler approach and what advisors are looking for has created a gap. One that is difficult to bridge—leaving many wholesalers struggling to capture advisor attention.

What do financial advisors want from mutual fund wholesalers?

The gap between what advisors would like from mutual fund wholesalers and what those same wholesalers deliver is significant. A recent Cerulli study revealed that, while advisors are hungry for education, best practices and practice management help, what they are really receiving are pitches about investment products. The big disconnect is a misunderstanding by wholesalers around the best way to add value for advisors.

How can mutual fund wholesalers close the gap to advisors?

The first step is to reimagine not just the way you interact with advisors, or even your offering, but to step all the way back and re-envision the wholesaler role. Perhaps “Wholesaler” is even the wrong name for the position today, as that name is more indicative of a middle-man function that inserts itself into a sales process.

Instead, what advisors really want, is not a mutual fund wholesaler but a tech-enabled business consultant. Someone who, like the advisor themselves, has transitioned away from old school sales strategies and is seeking to add value as a collaborator. Someone focused on helping advisors meet their business goals and provide even more value for their clients.

What does the new mutual fund wholesaler role look like?

As one asset manager put it, “This year, I’m reconfiguring my sales team—philosophically. Getting away from the focus on sales tools and strategies, and re-inventing the team as a provider of high-value services to advisors.”

It’s an inversion of the traditional wholesaling mindset, away from product push and sales, towards advice, consultation and partnership. Shared and communal instead of promotional. Service-oriented rather than narrowly focused on product information.

Download the case study to find out how one top wholesaler used this strategy to transform into a tech-enabled business consultant that advisors were excited to work with.

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