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Are Wholesalers Spending Time With the Right Advisors?

By Steven Miyao

Asset managers cannot actively sell to the approximately 300,000 individuals who make up the entire U.S. advisor base; it is simply an impossible task for scale and small players alike. They can, however, segment advisors so wholesalers spend most of their time with advisors who have high AUM with the firm and offer the largest upside.

Per kasina's FA Vision data, wholesalers seem to mostly segment by advisors' AUM with their firms. A wholesaler meets four times or more with advisors who have, on average, $17.4 million in assets with the firm. Advisors with $9.58 million are only met with once each year and, surprisingly, advisors with $12 million are not met with at all.

Segmenting on just the AUM that an advisor has with the firm doesn't take into account the overall potential of the advisor. When we look at the assets the advisor has outside the firm (overall potential), a different picture emerges. Wholesalers meet four or more times a year with advisors who have an average of $151 million in outlying assets. They meet only once per year with advisors who have $175 million in outlying assets. As such, advisors are meeting three more times a year with advisors who have $24 million less in potential assets than the advisors with whom they have only met once.

With too few resources to cover all advisors, firms need to focus on the highest likelihood of providing a long term profit. To do this, we suggest mapping advisors by two primary dimensions:

• Future Value Potential
• Existing Assets Under Management (AUM) with the firm

Future Value Potential represents the net present value of the future cash flows an advisor is expected to generate over the lifetime of the relationship. External wholesalers are a firm's most expensive and effective resource. Make sure your wholesaling team spends the most time with the advisors that have the biggest future value to the firm.