Asset managers are increasing their sales forces and wholesaler compensation to keep pace with increased advisor demand, new research shows.

Fund companies boosted sales forces by 13% this year with 40% planning to increase their distribution teams' commissions and bonus pay next year, according to a recently-released survey from research firm, kasina. Nearly half of the 34 asset managers polled (45%) indicated plans to hike compensation of their senior national account managers.

Lee Kowarski, partner at kasina, says the growth of distribution forces among fund providers is due in large part to many advisors demanding more specialized sales teams, especially in the RIA and defined contribution space. He adds that many advisory firms prefer more product specialists and when it comes to the defined contribution area wholesalers who have a firm grasp of key issues such as the Employee Retirement Income Security Act.

"Advisors look for support from individuals that understand their business," Kowarski says. "From an asset manager's point of view, there is a different sales process, meaning that the metrics and compensation schemes typically need to vary from other channels of distribution. As mutual fund companies continue to improve their segmentation, you will see increased specialization within the sales force."

Kowarski says asset management firms are "aggressively investing" toward tools that can help them keep pace with what advisors are looking for from their wholesalers including CRM systems, website analytics and market share data. The kasina study also shows a trend toward asset managers having one internal salesperson for every external wholesaler.

"Historically, most firms have had more folks in the field than in the home office," Kowarski explains. "Increasingly, the industry is moving toward 1-to-1, and several leading firms, such as Fidelity Investments, have more internal salespeople than they have external salespeople."


Dan Sondhelm, vice president/partner and marketing consultant at SunStar Strategic, says more asset management companies are beefing up their national account capabilities at broker-dealers like Charles Schwab and LPL rather than just dealing with individual advisors. He emphasizes that this allows firms to be better positioned for getting funds available on platforms and recommended research lists as well as increased visibility opportunities to showcase products at conferences.

"Mid-size firms are enhancing their national account capabilities because so much more of the action is done at the home office level," says Sondhelm, who works with 40 asset managers on distribution and marketing strategies. "National accounts create the opportunity by working with the platform and wholesalers can then participate in the opportunity through their working with individual advisors."

Sondhelm adds that some firms have wholesalers play the role of national accounts manager but the increased responsibility can create disadvantages with this approach. He says more firms prefer separating the job desciptions so that wholesalers can concentrate on selling and national account managers can focus on creating opportunities and developing strategies.

Alma Piscitello, senior vice president of strategic relationships with Northern Lights Distributors, says advisors are showing an increased desire to have accessibility to their wholesalers leading to asset managers bulking up their business development teams. Asset manager clients of Northern Lights who have been adding additional resources toward distribution efforts include CLS Investments, Good Harbor Funds and Clark Capital, according to Piscitello.

"There is a major need to have qualified sales professionals in the field," says Piscitello. "A lot of the financial advisors want increased engagement."


FolioMetrix, which has offices in Omaha, Neb., and Portland, Oregon, began adopting a hybrid model a couple of years ago that includes 70% internal wholesalers and 30% out in the field. The five-year old asset manager's CEO, Jerry Murphey, says the distribution efforts are headed by a consultant and the arrangement has provided savings as well as improving productivity.

"There is a cost factor with having someone go out there from meeting to meeting," says Murphey, whose firm is planning to open a third office for the Northeast region in Boston or New York. "We believe hybrid is the answer."

According to the kasina study, hybrid wholesalers have grown 10% in the last year.
Joe Franklin, president of Hixson, Tenn.-based Franklin Wealth Management, says he has been receiving more calls from wholesalers of late than in past years. Franklin says wholesalers have helped pay for half the costs associated with organizing client events such as cocktail parties. He adds that positive relationships have been established with both styles of wholesalers, but finds internal much easier to reach.

"We typically look to partner with any wholesalers that we work with and will work more closely and stay with those that support our business via client events," says Franklin. "We tend to develop deeper relationships with externals over time because the turnover does not seem as high and we see them face-to-face rather than just being a voice on the phone, although we have gotten to know a lot of internals via conferences and due diligence meetings."

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