Registered investment advisors can present a major opportunity for asset managers to enhance their marketing and distribution strategies, but successfully penetrating this market also presents some challenges.
Gaining access to top advisors and centers of influence was indicated as the biggest challenge for wholesalers the last two years, according to recent studies by Cerulli Associates. Meanwhile, mutual fund and ETF wholesalers are increasing their number of annual advisor visits and monthly calls, according to Cogent Reports.
Dan Sondhelm, a marketing consultant at SunStar Strategic, works with 40 asset managers on distribution and marketing strategies with heavy focus on wholesalers and their outreach to RIAs through blogs, whitepapers and online newsletters. Sondhelm says today's asset manager wholesalers need to particularly concentrate on email communication with RIAs and customize messages to clients and prospects. "You'll get a much better open rate if you customize to people on the list," says Sondhelm. "You need to differentiate the communications." To find out how wholesalers are working to enhance relationships with RIAs we decided to let experts in the industry weigh in on trends they are seeking. Here are some responses.
Jonathan Dale, director of distribution, SEI
One of the biggest trends we've noticed recently is a shift away from face-to-face meetings between wholesalers and RIAs. There is now a heavy focus on thought leadership and digital marketing strategies. While this can be a great way to reach more RIAs at one time, it's important not to take a one-size-fits-all approach.
There are 14,000 RIAs out there. Half of them have less than $100 million in AUM. That group is going to have a completely different set of goals and challenges than the half that has more than $100 million AUM. If wholesalers are going to use thought leadership and digital marketing strategies they need to make sure they're targeted and segmented.
The ones that are able to provide value at every step along the way in an RIAs growth process will differentiate themselves and be the more likely to succeed in what is a very competitive environment.
Stephen Rudman, managing director and head of sales, Direxion Investments
Today's wholesalers function as a vessel of the underlying value proposition that best serves the client, and less as a semi-social comrade.
The proliferation of new products and asset classes has resulted in a complex financial terrain that requires specialized knowledge. It is in this capacity that the "new" wholesaler has emerged, serving as a vital educational resource, with deep knowledge of not only the product, but how that product fits into portfolios and how its strategy is implemented. The wholesaler puts market information into context, and creates action items. Wholesalers serve another critical function through practice management, isolating ways to use tools, insights and benchmarking to help advisors grow their business. As advisors explore various alternative investment options, the wholesaler can serve as a valuable resource and deliver on the intensified demand to mitigate risk. The wholesaler serves to introduce the best tools in the alternative space, offering the best solutions for clients gravitating toward alternative strategies. The rise of the increasingly sophisticated, multi-dimensional expert is a storyline that will continue to unfold in years to come.
John Meunier, managing director, Cogent Reports
Wholesalers are the first to point out the many challenges of reaching advisors, especially top producers. However, despite their efforts to get in front of the right advisors, our research indicates that when they do wholesalers manage to positively influence advisors' future investment selections less than half the time. Those who succeed are skilled in understanding the individual advisor's practice, taking the time to present investment choices in a context that is both relevant for and beneficial to that advisor and their clients. As new products and investment strategies are constantly being introduced, many advisors express a genuine desire to understand where these tools and approaches can fit in, particularly as they seek to differentiate themselves and their practice to attract and retain a more affluent and sophisticated clientele.
More than three-quarters (78%) of advisors surveyed recently by Cogent indicated being satisfied with their recent mutual fund wholesaler interactions.
However, only six firms achieved satisfaction scores higher than the industry average. The increasing prevalence and preference among many advisors for off the shelf solutions such as model portfolios and managed accounts make the wholesalers' jobs even more difficult. This is why so many asset managers and their sales teams are fishing further upstream in search of a receptive audience to an increasing niche-oriented product set that can augment or enhance what advisors are currently offering.
Chuck Thompson, head of U.S. distribution, Henderson Global Investors
Asset Managers are in a unique position to build trusted relationships with RIAs to offer counsel on a range of topics from macro issues to the benefits of active versus passive funds. Asset Managers can provide RIAs with valuable information about the changing global investment landscape as well as specific country and sector knowledge.
Henderson Global Investors works to counsel advisors by sharing knowledge and research through web-based tools such as its iPad app, which is designed to help advisors and investors gain a deeper understanding of the firm's expertise through investment commentary and videos that are available for download on the mobile platform.
Paula Jurcenko, senior vice president & director of product management/distribution, Huntington Asset Services
The relationship with RIAs is viewed as so important to Huntington Asset Services that the asset manager is looking to hire additional wholesalers this year who have experience working with advisors.
Paula Jurcenko, Huntington's senior vice president and director of product management and distribution, says she focuses heavily on electronic communications to RIAs since arranging face-to-face meetings can often be more difficult. This interactive outreach includes webinars, while papers and online commentaries written by fund managers.
"[Electronic communication] is important everywhere but especially with RIAs, says Jurcenko, an asset management veteran who has held her current role at Huntington since 1989. "The RIA channel will keep asset managers on their toes."