In the face of the shrinking asset management landscape and soaring distribution costs, not to mention the home-office centralization of brokerage firms’ investment choices, fund companies need highly accomplished national accounts teams, according to a new kasina report, “Excellence in Distribution: National Accounts.”
“Distributor relationships are becoming more vital to the profitability of asset managers as the industry consolidates,” said Steven Miyao, founder of kasina. “Seasoned national accounts managers (NAMs) with exceptional business strategy and management skills are critical to the ability of a firm to win business and expand distributor relationships.”
While nearly all, 92%, of the fund companies that kasina interviewed for the report agreed that national accounts is increasing in importance, they don’t have ample resources; only 68% said their companies are increasing their sales staff, and less than half, 48%, are getting bigger budgets for their national accounts teams.
More surprisingly, perhaps, NAM total compensation lags total compensation for external wholesalers by 17%—underscoring a disconnect between upper management’s assessment of NAM’s importance and the new reality of an inceasingly competitive distribution landscape.
Thus, kasina recommends that mutual fund companies take special care when hiring members of the NAM team. “Hire the best and brightest multi-talented builders, business strategists and product specialists,” kasina says. In addition, decrease the average number of brokerages that the NAM team is responsible for from the current 38, kasina says. With NAM teams typically numbering 13 people, this spreads them far too thin, the consulting company says.
Measure profitability for the most important relationships, kasina recommends. While most fund companies are familiar with setting sales goals, only 24% measure profit and loss by distributor. Further, the national accounts and sales organizations need to be on the same page with respect to common goals, incentives, compensation and products.
Finally, kasina says fund companies should empower the national accounts leader to identify the key strategies, investment choices and best practices their firm should use to best serve distributors.