Which Wholesalers Rate Best With Advisors?

Do you like good old-fashioned face-to-face interaction with wholesalers who represent products and services offered by asset managers, insurance firms or other financial services companies, and do you think they add value to your practice? If so, chances are you work at a broker-dealer and/or are in the 40-and-older crowd. Would you rather avoid the handshake and instead engage with wholesalers via a technology-based outreach such as web-delivered video? And do you think wholesalers are of dubious value? If so, chances are you work at an independent registered investment advisor, have a more entrepreneurial bent and/or are a thirtysomething or younger.

A recent report from Practical Perspectives, a Boston-area wealth management industry research and consulting firm, looked at how financial advisors engage with—and potentially benefit from—their interactions with wholesalers. The report, How Wholesaling is Changing: The Advisors Perspective—2018, incorporates the input from more than 750 advisors and paints a picture of what works or doesn’t work for them regarding wholesalers.

While some advisors consider wholesalers to be a nuisance (in particular, those from companies they don’t have an existing relationship with), by and large they said wholesalers often provide a beneficial service.

“The support provided by wholesalers is clearly important to advisors in a world where they’re time-constrained,” says Howard Schneider, president of Practical Perspectives. “They do rely on wholesalers—especially in the broker-dealer channel—to introduce them to solutions, keep them up to date on industry trends, and give them ideas on how to better serve their clients.”

Among the report’s findings:

• Wholesaling contacts with advisors can greatly vary. About 20% of advisors said they had more than 20 interactions in the past 90 days, while roughly half of advisors received 10 or fewer contacts. Broker-dealer advisors tend to get more wholesaler outreach than RIAs.

• Advisors said the total volume of wholesaling outreach has grown during the past year, especially in technology-based formats. But given advisors’ busy schedules, it’s not surprising they’re less willing to interact with wholesalers from firms they don’t already do business with.

• Most advisors prefer specialist wholesalers who represent a defined solution rather than more generalist or unaffiliated wholesalers. And advisors indicated that effective wholesaling is based more on the individual wholesaler than on a particular company’s overall approach to wholesaling.

Basically, advisors react more favorably to wholesalers who’ve done their homework regarding the needs of an advisor’s particular practice. “Advisors want wholesalers to offer more relevant content and support that help them use solutions in an effective and appropriate way,” according to the report.