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The Misery of Internal Wholesaling


A dozen years ago, an internal wholesaling position with an asset manager was a highly sought-after job that most viewed as a launching pad for a career in the highly lucrative and fast-paced financial services industry. As a result, young and old professionals competed for the limited positions available, hoping to be chosen and potentially groomed for the coveted external wholesaling role.

The internal wholesaler would focus on making calls to designated lists of advisors in a defined territory to introduce the firm’s investment solutions and help schedule appointments for their external counterparts.

In those days, the “sales desk” was a lively place where all the company’s internals worked together in a collegial but competitive environment. On a given day, an internal might make 50 outbound calls to advisors and have ten or more meaningful conversations. They could also schedule 3-4 days of meetings for their external wholesaler the following week.

The Winds of Change

But around ten years ago, internals started to notice that access to advisors was becoming more difficult. Fewer advisors would answer their phone calls or return a call from a voice message. And the email blasts that were once an essential tool for the sales desk to generate interest failed to produce nearly the same response as in previous years.

The Misery of Internal Wholesaling_obstacles

Fewer and fewer advisor interactions meant internals had less success in helping raise capital, which created tension amongst each other and with their externals. The sales desk quickly became a wasteland of frustration and burnout.

A Digital Culprit

While asset managers recognized how hard it was becoming for their wholesalers to schedule meetings and have advisor conversations, most didn’t understand why. Very few firms realized how changes in "buying behavior" brought on by easy access to information were affecting their sales efforts. And even fewer knew what to do about it.The Misery of Internal Wholesaling_very few firms

When the pandemic hit in early 2020 and offices closed for over a year, advisors quickly realized they could get along fine without the wholesaler interactions that were once a crucial part of their practices. The pandemic lockdowns accelerated what many considered a “digital evolution” among advisory firms and turned it into a “digital revolution” rout.

Surprisingly, most asset managers I encounter still don’t understand how much advisors’ preference for using social channels and search engines to address their needs has disrupted the traditional wholesaling model. Nor do they recognize the risk of delaying the inevitable digital transformation they’ll need to make to survive.

The Misery of Today’s Internal

Today, the internal wholesaler can make 50-60 advisor dials daily and never have one conversation. Emails elicit no response. Scheduling external meetings is nearly impossible. The sales desk is devoid of energy, and senior leadership continues to trim internal wholesaling staff whenever possible because the model is less profitable every year.

The data support these trends, as highlighted in JD Power’s latest research, The 2022 U.S. Advisor Online Experience Study. which is based on the evaluations of over 2300 advisor responses, and concluded that,

“Asset management websites have officially replaced wholesalers and legacy relationships as the primary drivers of engagement with investment advisors.” - wealthmanagement.com

Mike Foy, senior director and head of wealth intelligence at J.D. Power, goes on to say:

“It's certainly not a surprise that over the last number of years, and certainly the pandemic accelerated this, but asset managers have been relying less on large, expensive, wholesaler teams and being more focused on interacting with advisors through digital channels.” - Mike Foy, JD Power

I see this situation at many asset management firms I consult with. I am always trying to understand why these companies continue to use a distribution strategy that no longer works. Unfortunately, many are unaware of how to change or modify their model. So I introduce them to digital distribution.

Resuscitating the Internals' Role

When I discuss digital distribution for the first time with an asset manager, internal wholesalers often react with controlled fear because it sounds like something that could make their position obsolete. But just the opposite is true.

When a firm embraces and begins to execute a digital distribution strategy, internal wholesalers become more valuable than ever. That’s because, in digital distribution, sales and marketing professionals monitor and capture “signals” of a prospective advisor’s activity as they interact with your company on your website or social media.
The Misery of Internal Wholesaling Digital DistThose signals allow the internal wholesaler to focus their time and energy on the right advisor at the right time with the right message because they are informed and aware of the advisor’s challenges and interests in a way they never were before.

The Misery of Internal Wholesaling_signalsThese insights enhance the internal credibility and value in the eyes of the advisor and subsequently increases the probability of raising assets. 

A Return to Prominence

If your wholesalers are struggling to access advisors and you're not hitting your revenue targets, I encourage you to consider implementing digital distribution. Every time we execute a digital distribution strategy with an asset manager, wholesalers who would be slow to embrace the model become the greatest advocates. Internal wholesaling can become fun again, and it all starts with digital.

Register for our complimentary video series here to explore how you can transform your distribution strategy.

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