Direct Support
The most effective way wholesalers can help is to work closely with financial advisors to bring in new clients and new assets to manage. In these cases, the wholesaler or the specialist is a coach and sometimes even a “team member” of the financial advisor.
By coaching financial advisors, wholesalers can build on their educational programs and resource coordination to better help the advisors implement and provide expertise, which will garner them new business. As a team member, the wholesaler or specialist can speak to or make presentations directly to prospects, clients and other professionals.
The direct approach isn’t currently very common, and that means some wholesalers can seize an opportunity by doing it, using it to meaningfully add value to the practices of financial advisors and differentiate themselves from other wholesalers. But since it’s a powerful approach, it will be increasingly adopted by leading wholesalers and asset management firms over the next five years.
The direct approach of wholesalers offers a clear connection to business outcomes. The prospects, clients and referral sources involved can be tracked, and the level of success evaluated. There is also likely to be an “expansion effect” as the approach leads to business beyond the contacted clients and other professionals.
Combining Approaches
The world of financial product wholesaling is changing, and the pace of change is only going to accelerate. If a wholesaler is offering things similar to what others are offering, it is going to have to do much more in the future to win the business of advisors.
It’s still important that these companies can offer support for financial products (again, that will be more appealing to financial advisors with fewer assets and newer to the business). At times, it will also prove valuable to more experienced and capable financial advisors.
But financial product support will increasingly mean integrating the products into more all-encompassing wealth planning solutions. For instance, wealthier clients will be interested in strategies that eliminate taxes on investment portfolio gains. Business owners, meanwhile, might want to take income tax deductions, perhaps on hundreds of thousands of dollars, and receive nearly all of these monies, including the investment returns on these funds. Wholesalers that can show advisors how the products work with these wealth management solutions will likely do significantly better than their peers.
Education is always important to client acquisition support, and it’s been institutionalized in what is referred to as “value-added wholesaling.” Today, educational programs abound; some of them are very good. A great many of them are less so.
Resource coordination is also becoming more common, but many times lacks systemization and institutional support.
In the future, the most powerful way wholesalers will distinguish themselves (as well as best serve financial advisors and their clients) is through direct support—by combining and seriously upgrading other approaches.
The Bottom Line
Over the next half-dozen years, the industry of wholesaling financial products is going to seismically change. Those asset managers and wholesalers failing to adjust will become less and less successful. Many will become redundant.
But those embracing the trends will be able to exponentially increase the value they offer advisors. As long as the products are competitive, the successful asset managers will find much larger audiences. And the wholesalers will become more integral players, delivering considerable value to financial advisors and being well rewarded for their efforts.
Russ Alan Prince is president of R.A. Prince & Associates. Brett Van Bortel is director of consulting services for Invesco Consulting.