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Wholesalers Adapt to Advisers' Changing Needs


The fundamentals of what advisers need from wholesalers are changing, and wholesalers have no choice but to adapt. Our research at kasina concludes that wholesalers should focus on serving advisers' needs for:

* Better products and solutions for clients (advisers rate performance/risk/correlation at 7-8 on a 10 point scale of importance, well above other factors);

* Improving their insights and context (news and market commentary trails only product info as a reason advisers visit asset manager websites); and,

* Ideas and best practices to help build their businesses (the importance of which has jumped enormously in the last two years).

In the past year, as we have conducted our research by interviewing and surveying advisers, wholesalers and asset managers, a clear picture has started to emerge about what advisers expect from wholesalers these days. The successful wholesaler of the future will be far different than that of the past because of changes that are taking place in the adviser world.

In the simplest terms, most advisers only care about three things:

1. Doing the right things for their clients

2. Developing themselves so that they are (and look) smart, professional, and capable

3. Building their business and making money

While face-to-face meetings may be nice, they don't make the short list of these three basic "needs." We are hearing from advisers that anything that does not directly, quickly and impactfully hit on one of the short list of needs above no longer warrants their time.

So, why the change to this seemingly more impersonal, distant view of asset management firms and their wholesalers? Two primary catalysts come to mind.

First, advisers are under more time constraints than ever. Their clients have been through the worst financial crisis most of them can recall, and are demanding answers, better products and more planning for their advisory dollar. Advisers are scrambling to preserve client relationships; as their client bases age, more efforts will focus on retaining assets than on capturing dwindling new cash flows. The strains on advisers will increase, and asset bases will grow more slowly than in the past-but the work needed to satisfy clients with retirement income needs, estate planning and insurance concerns, etc. will grow more quickly. The trend toward advisers having less time for wholesalers will not reverse.

Secondly, technology has advanced to the point where much of what wholesalers delivered in the past (access to expertise, education, fund information, new insights) is at the fingertips or mouse-click of an adviser. An enterprising, tech-savvy adviser can know all publicly available information on a mutual fund within five minutes. The web has commoditized much; in addition, it has made information portable. Our "What Advisers Do Online" research in 2009 indicated that 79% of advisers use some form of mobile device to access content online. And, advisers admit a willingness and desire to deal electronically more than ever. This is good news for asset managers, as we have shown that advisers who use a firm's website account for at least 25% more flows than those who do not. But, it does mandate that firms re-think what their wholesalers bring to the party that advisers cannot get online.

So, how can firms serve these increasingly standoffish, self-reliant, mobile mass of advisers? By refocusing on the advisers' true fundamental needs and by allowing the adviser to select the mode and frequency of interaction that works best for him or her. This is not to suggest that the wholesaler of the future should just be an order-taker. Proactivity will still win the day. Enterprising sales professionals can still make their mark by helping advisers:

* Do the right things for their clients- bringing new, innovative products to their attention that meet new client needs. Advisers told us the product characteristics they care about most are: performance, risk and correlation measures. This is well above measures for brand, fees and manager tenure. Wholesalers' opinions and "recommended status" come in even lower. Incremental tweaking of client portfolios does not hold much allure for advisers. They are focused on the asset allocation fundamentals of the product. However, new products that address retirement income needs, or risk mitigation, for example, would be welcome value added.

* Become smarter and more capable -acting as a concierge to firm insights on the market and economy via materials, brokering conversations with economists and/or portfolio managers, or directing them to proprietary firm content on the website. Advisers turn to asset manager websites first for product information, and next for news and commentary to educate themselves and improve interactions with clients.

* Build their businesses -We found 14% and 5% jumps (from 2008) in the percent of advisers that visit asset manager sites for business building and sales ideas, respectively. Tools, analytics and support trump steak dinners any day.

To sum up, the superstar wholesaler of the future will not be a sales guru, as in the past. They are more apt to resemble a combination of a concierge, trusted business partner and schmeek (a colorful term coined by a client of ours, meaning a combination schmoozer/geek). Their success will hinge on their ability to focus on the underlying fundamental needs of the advisers of today.

 

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