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Cutting Fat - What Part of the Budget will be Cut

by Steven

The Dow went down another 3.6 percent on Monday and fell below 10,000 for the first time in nearly four years. The downward spiral of the economy will affect the budgets of distribution organizations.

Distribution heads are reluctant to cut wholesalers. The consensus at our latest Distribution Roundtable was that due diligence meetings were the first to go.

In recent years the cost of bringing an advisor to Boston or NYC has skyrocketed. Most firms had budgeted $1500 per advisor, but that is no longer possible. In working with our clients we found that those meetings were not very well-executed and rarely drove significant assets.

Firms are also being more diligent with the use of outside speakers. Some firms have started to charge the wholesaler for the speaking fees. The effect has yielded better qualified advisors and superior utilization of the speakers.

It is hard to predict when the market is going to flatten. In preparation, Distribution teams should cut what doesn't add significant value.