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Never Allow A Crisis to Go to Waste

"Rule one: Never allow a crisis to go to waste" - Rahm Emanuel

By Steven

The industry has already lost $1.3 trillion in assets under management in the first three quarters of the year. Distribution teams are responding by cutting the bottom performing wholesalers. Organizations are taking this opportunity to reassess their wholesaler territory strategies, and focus on understanding the difference between overall territory potential and the actual impact of the wholesaler. Understanding this difference is fundamental to a successful wholesaling strategy.

To better assess territory and wholesaling potential, we recommend that firms:

• Acknowledge that the territory and the wholesaler are not one and the same - 50 percent or more of incoming assets within a given territory may be derived from advisors that the wholesaler has never actually engaged.


• Apply more rigor to the analysis of wholesaling opportunity - Firms can incorporate information from National Accounts and supplement it with data from outside vendors, such as Coates Analytics, IXI, and Discovery Data.

Once firms understand the underlying potential of their territories, they need to improve upon how they evaluate their wholesalers. We found that the following steps lead to success:

• Compensating for wholesaler alpha - Pay wholesalers for lower-than-average redemptions in their territories. This can be done simply by taking the average redemption rate for the firm and paying wholesalers that have fewer outflows then their peers.


• Matching the wholesaler evaluation metrics to the sales goal so that both are grounded in wholesaling potential - Separate assets derived through wholesaling contact from those acquired without wholesaling contact. Pay only on the assets that wholesalers influenced.

87 percent of Sales managers do not know the percentage of assets coming in through a given territory that results from the efforts of wholesalers. This is often the cause for underperforming Sales teams. Take advantage of this crisis by redesigning your territories, and reevaluating the way you measure and compensate your wholesalers.