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How Good Is Your Wholesaler?
By Derek
If you read Mike McLaughlin's blog entry from October, or have had discussions with us regarding wholesaler evaluation, you have probably heard us talk about the Lake Wobegon effect. We have observed the Lake Wobegon effect in the Sales organizations of asset management firms. Every senior manager interviewed for our recently released whitepaper Separation Anxiety: Differentiating the Wholesaler from the Territory communicated a sincere belief that his or her wholesalers are top-notch. Sales managers often rely on gross sales figures for a territory, anecdotal evidence, and "gut" instinct to determine their assessments of wholesalers.
There is no question that Sales managers often have a lot of experience to guide them. But how do they really know which wholesalers are above average? How do they know whether each wholesaler is getting an equal opportunity to succeed? How do they know the true impact of their wholesalers as the intermediary channel becomes more institutionalized? How can they gain more productivity from their most expensive sales resource?
These are questions we sought to address in our new whitepaper. We think it is important for firms to recognize the difference between the sales results of the territory versus the sales impacted by the wholesaler. We also think it is important for sales organizations to invest more time into understanding the dynamics of this difference in order to set more realistic sales goals and to have the proper context by which to evaluate wholesalers.
Why invest in the effort? A better understanding of wholesaler impact can lead to increased productivity. Consider the impact of a 20% increase in effectiveness across the typical wholesaling force - such a change could lead to new flows approaching $1 Billion or more for a firm. Furthermore, the institutionalization of the intermediary channel is quickly changing the distribution landscape and asset management firms need to realign their strategies appropriately or risk leaving assets on the table.