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Asset Managers Go for the Gold; Seasoned National Accounts Managers Can Get Them There
by Deb Wetherbee
Listening to my two sons, 4 and 6, relive every moment of the 2010 Winter Olympics is fascinating. They don't differentiate among the various sports and perceive the US athletes as a single team. While this is true in one sense, as adults we tend to focus more on the individual effort necessary to win THE Gold in different sports. For years, financial service firms have treated the external wholesaler as the "elite athlete", the key to advisor relationships and assets, aka THE Gold. At the same time, we have been talking about the greater influence that home offices exert on advisor business. While wholesalers will remain key players, the National Accounts Manager is moving to the head of the team.
Our FA Vision survey results confirm the trend toward home office decision-making. Our most recent survey shows that advisors put 21.6% of their overall production in mutual fund wrap platforms and 33.5% of their mutual fund business in products on the recommended lists. Both of these figures are trending up from the May 2009 results. With our May 2010 survey just around the corner, we will continue to monitor this trend. Advisors also anticipate increasing use of both model portfolios and UMAs in the next year. This would lead one to believe that asset managers would invest in or reallocate resources to the National Accounts area.
While each member of the team -- externals, internals, hybrids -- is important, the role of the National Accounts Manager is critical. The home office relationship is at the center of a successful distributor/asset manager relationship. It is imperative that Sales and National Account teams work in tandem to support your focus firms. In our recent research reports on wholesaling, one on Internals and one on Externals, we found that 65% of asset managers intend to increase their Internal staff and 59% of firms do not intend to reduce their Externals. Asset Managers do understand this at some level. Our newest research, Excellence in Distribution: National Accounts, shows that 68% of firms plan to increase staff while 48% plan to increase budgets. With the communication and coordination involved in developing strong relationships at the home office, everyone at the asset manager needs to work together to support the focus firms. This effort must have the right person leading the team.
One tactical win/win reason to get your players on this same team is to develop a successful cross-selling strategy. Our FA Vision research shows that, on average, advisors use between 7 and 8 asset management firms (channel stats available, too). If yours is one of them, it is more profitable to cross-sell to these advisors than to find new advisors. This cross-selling strategy should start at the National Accounts level (I realize platform access comes first). At this point our research shows that most advisors usually use between 3 and 4 products from one firm. Of course, every product is not suitable for every advisor, but this presents a great opportunity to work closely with your distribution partner and identify the advisors to go after for your cross-selling efforts. In addition to enhancing your relationship with the distributor, a cross-selling strategy forces the National Accounts team and the Sales team on the same page with a targeted plan to increase assets. This, of course, the ultimate goal of all involved.
The industry is making strides in the right direction. There are still challenges that can be met with creative solutions recommended in our report on Excellence in Distribution: National Accounts.
As we get to the mid-point of the 2010 Winter Games it will be interesting to see if my boys begin to see the individual "elite athletes" or continue to view them all as part of the US team. Your distribution strategy needs to be implemented by a cohesive team to be effective and competitive. At the head of that team, it is time for the baton to pass from external wholesalers to National Account Managers.