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Shelf Space

By Steven Miyao

Historically, firms have been happy to sign selling agreements with distributors and then trumpet their access to an expanded platform. But while the selling agreement gets you in the virtual door, it doesn't help you close a single sale. Maximizing shelf space value is not just an exercise in adding more slots but of securing the most valuable slots across the industry. Asset managers need to recognize that shelf space is not made available in random ways. Distributors have processes that drive additions and deletions of products from shelves that determine when shelf space opportunities will exist.

Like most sales organizations, financial product distributors want to move the inventory. To that end, they promote products on their shelf space that bring them the most profits. These include packaged products like defined contribution, mutual fund wrap, and SMA wrap platforms that are profitable and easy to market. Distributors and advisors like these packaged products because they streamline operations and provide clients with asset allocation and automatic rebalancing.

Every distributor is unique, but understanding the floor plan is critical to product development and marketing efforts. Firms must understand where to best "put" their products to get the best exposure to advisors. For asset managers who want to avoid the bargain basement treatment, the solution is clear: make sure your offerings are aligned with the way products are presented to advisors within the distributor's virtual store.