Asset management firms are not fully leveraging the capabilities of their internal wholesalers, according to a new report from Kasina, “Excellence in Distribution: Internal Wholesaling 2011.”
Firms are faced with multiple challenges to their profit margins, Kasina said: increasing client demands, distributors clawing to sustain their own profits and pricing and cost pressures. “In this environment, internal wholesalers provide cost-effective sales and service capabilities that make a huge difference in advisor loyalty and buying intent,” Kasina said.
Lee Kowarski, a principal at Kasina, said: “Forty-four percent of advisers who had contact with firms’ internal wholesalers are advocates of those firms, meaning that they are highly likely to recommend the company. This compares to only 24% of those who did not interact with internals. Advocacy translates directly into more business, as 51% of advocates plan to do more business with the firm, compared to 22% of non-advocates.”
In addition, contact with internal wholesalers improves advisers’ perception of a firm’s brand, the ease of doing business with it and the sense that the asset management firm is dedicated to advisers.
Furthermore, advisers prefer phone and online support to in-person visits. Thus, firms have the opportunity to use and challenge internal wholesalers more than they do, Kasina said. To that end, asset managers should use state-of-the-art client relationship management systems, improve training and financial incentives and develop clear career paths for internal wholesalers.