WELLESLEY, Mass. - Gone are the supposed days when wholesalers stood around conference booths all day, cavalierly handing out golf balls, or taking brokers out for cigars and whiskey. To get through the new "Fund Selection Unit" gatekeepers at brokerage firms, today's wholesalers need not just have excellent people skills and be nimble, but be highly knowledgeable about the mutual funds they are selling, retirement planning issues and the economy, as well as be technologically savvy.

"Wholesalers act as the quarterback in the field," said Matthew Witkos, president of Eaton Vance Distributors, at the National Investment Company Service Association's General Membership Meeting here, held last Monday at the Wellesley Country Club. "They have such a huge responsibility. Imagine trying to remember what product you have on what platforms at what time."

Wholesalers also present the image of the company to the public, and like a quarterback, they are only successful if they are supported by a strong distribution team.

"Wholesalers need a broader depth of knowledge and an understanding of the competition," said a wholesaler for a major insurance company in Los Angeles, who asked not to be identified. "A firm can create a great database of information, but they also need an expert to go with those databases."

In the old days, wholesalers were basically door-to-door salesmen, covering their own territory and knowing from experience which clients to wine and dine. With the technological boom and availability of information on the Internet to everyone, however, it's far more useful now for wholesalers to be able to direct clients to that information, explain how it's useful, put it into context and sell a package of mutual funds as integral components for investors' portfolios, rather than as a single product.

"Mutual fund distribution today is about serving the needs of professional buyers: fund wrap program sponsors, defined contribution platforms and variable annuity and sub-advisory platforms," noted Darlene DeRemer, a partner with Grail Partners. She also noted that whereas 22% of mutual funds were sold directly to investors in 1999, by 2012 that is projected to decline to only 9%. Accordingly, nine years ago, 50% of funds were sold through intermediaries, and in four years' time, that is expected to rise to 61% (see chart).

Accessing the Database

Also, today's wholesalers are increasingly required to input data into a customer relationship management (CRM) system. By sharing sales information on a central database, managers and other wholesalers can see which clients are buyers and which ones are just lookers, as well as which areas could use a little more attention.

"Wholesalers are expected to explain information, not necessarily provide information," said Jim Jessee, president of MFS Fund Distributors. "Most of the basic information about a fund can be found online. Wholesalers should be talking to advisers about how their products complement what the client is doing."

The rapid spread of information dramatically changed the role of wholesalers, Jessee said. There is value to having a wholesaler who is a charismatic, relationship person, but that can't be their entire game, he said.

"The fact that you have a nice personality is the ante to get into the game, but you need more than that," Jessee said. "A lot of our better wholesalers are more analytical."

With investors calling for lower fees on mutual funds, fund companies are always looking for ways to streamline their operations.

CRM platforms can help a company's sales force share information about clients and hopefully make the team stronger as a whole.

"For a lot of us, we were there when they gave us all cellphones," Jessee said. "They were very primitive and rudimentary, but clearly there were advantages.

"Likewise, our CRM software is a tad clunky and requires patience," he said, "but we don't want to have 80 people running around doing their own thing and have all the information in the back of their minds when they leave or retire."

This change has been hard for the "old guard" of wholesalers to adjust to, the L.A. wholesaler said.

Leading-Edge Technology

The L.A. wholesaler said his company's web-based CRM is an essential key to any sales force. "Our portal came out in 2001, and they are always making improvements to it," he said. "It's so useful; it does everything for us. You can filter by client name, wholesaler, region and state. The MapPoint software by Microsoft lets you see where the sales are going. For example, you can type in a zip code and see how many sales in variable annuities that region had last year."

He said the program is successful in part because the wholesalers enter so much data into the system, including logs of conversations.

"Our guys in the field have laptops, but in five years, they'll be using tablets, BlackBerrys and PDAs," he said.

Conversely, a drawback of the technology boom is the ever-increasing complexity of financial products. Wholesalers need to be able to understand and explain complex products to advisers.

"One of our challenges is to train our wholesalers how to talk about guaranteed income," said Jack Sharry, senior vice president of alternative retirement solutions for The Phoenix Companies [see related story in MME 5/19/08]. "Their job is to train our clients to come back to our website."

Jessee said it can take his firm at least a year to launch a new product because of the extra time spent vetting out the process and making sure the investment team and the distribution team both agree on the plans.

"Sometimes when you're breaking new ground, you have to spend a little time getting there," Sharry said.

(c) 2008 Money Management Executive and SourceMedia, Inc. All Rights Reserved.

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