70% of RIAs Are Not Influenced by Wholesalers and 46.7% React Negatively to Interactions

That was the startling headline we recently read.

The statements were derived from a study done by AP Viewpoint: How Advisors Choose Actively Managed U.S. Equity Funds.

We encourage you to get the full 80 page report (link provided below), as our focus here is solely on the findings and accompanying quotes that the RIA study participants offered about ‘product representatives’ aka wholesalers.

Question: How much influence do product representatives have in your decision-making process for recommending actively managed US equity funds and why?

The participating RIA group responded:

Very little: 53.3%
None: 16.7%
High: 13.3%
Some: 10.0%
Did not answer: 6.7%

A deeper dive into the quotes provided by the participating RIAs reveals that the key word in this question is “influence” – a notion that the vast majority of RIAs wish to avoid.

For those that answered Very Little or None, quotes of interest included:

“Almost none. We do not want our personal bias I this decision. Having said that one of the last questions we ask is how do you communicate with our team and we want more communication or ease of communication. Love quarterly conference calls with replays so we can catch them at our own schedule.

“Less and less. We focus more on our internal and external research.

“Very little. Yet, we are also in a relationship business. So a small, small weight is given to that relationship.

“Not a ton as U.S. equity funds are not considered to be complex. They can be helpful in coming out with a PM to conduct a brief seminar on the fund to build awareness, but we usually wont do that until the Investment Committee has approved a fund. There is a lot of information out there on the web on most funds, and through research sources, so there isn’t usually a strong need to talk to a product representative.

“Little influence, but they do assist with calling attention to items/investments worth investigating.

“They might be the first to introduce us to a fund but their really isn’t a lot of influence from there on out.

“We are agnostic by design.

The High or Some respondents offered:

“Very much influence. If I like someone I’m much more likely to sit down and meet with them and hear about what they have to offer. If I don’t, I’ll avoid them like the plague. Unfortunately I know there are some good funds out there that I don’t know much about because I don’t want to deal with their wholesaler.”

“The wholesalers have a great deal of influence. I am old school I like to look people in the eye and get the sense of true value or BS.”

“They can have influence if they provide accurate supporting data.”

“A lot of influence. When they can convey the story of their firm and why they are different, I can tell the story to the client.”

“Wholesalers are very valuable. I use 5-6 that I’ve become friends with will give it to me straight and tell me they would get rid of funds they wholesale for due to poor performance. They know when funds are good or doing poorly. They definitely add value and I use their wisdom.”

Question: Are there things that fund companies do that you find particularly annoying or useless?

The participating RIA group responded (top five answers):

Excessive phone calls: 26.67%
Nothing: 26.67%
Product representative visits: 20.00%
Too much spam: 13.33%
High minimums for institutional sales classes: 3.33%

Quotes of interest:

“When an inside wholesaler wants to spend 20-30 minutes with me and find out about my business. That does nothing for me and is a waste of my time on the phone.”

“Sending punk, cocky wholesalers who think they walk on water or know it all to call on me.”

“Yes please do not try to get a meeting because you are breezing through town? Really? I’ve never met you and “because you are in town” I should make room in a brutal schedule to see you? What about addressing a key and present challenge or market issue now maybe then I will meet with you. Please also do not send me unnecessary emails.”

“Constantly call for luncheons. And my biggest issue: Neglect to sell their winner knowing that I use it….and instead try to push their Floating Rate Fund.”

“Lot of calls. Emails are much easier as we would rather not miss a client call.”

“Calling too often is one of them because we turnover our funds so little. It is like dating someone you know you are not going to want to have a relationship with in the future. It is a waste of everyone’s time.”

“Too much spam. Failing to highlight weaknesses or areas where funds/strategies may not be appropriate. Over-reliance on perfectly backtested data and cherry picked performance periods.”

“It really bothers me when they are very salesy or pushy. Annoying also when they just barge in my office while I’m working. My least favorite question is “tell me about your business”… no, you tell me about your fund and I’ll make the call if it fits… then I can tell you about my business.”

And, on the brighter side:

“Fund companies try to make contact and build relationships through a variety of ways, just as I do with prospective clients. I do not find any particular method annoying or useless as a whole. It’s not about the method, it’s all about the content. Webinars, conferences, phone calls, etc. – the content must be strong or no thank you.”

Wholesaler Masterminds Commentary:

This AP Viewpoint study was conducted across a small sampling of RIAs – and it’s safe to say that their insights and attitudes echo the larger universe of advisors that distributors wish to serve.

That, as a community, we have not improved upon our skills in such a way that we still have advisors complaining about the quality of our communications, attitude of our sales professionals and/or the personalization of our interactions (in an era where personalization is just not that hard to do) is troubling at best.

It also leaves the door wide open for wholesalers who choose to run their practices in a manner that acknowledges the subtleties of the channel and the advisors working therein.

Click here for the full How Advisors Choose Actively Managed U.S. Equity Funds report and accompanying webinar replay.

Additional reading/listening:

Know More To Sell More: The Importance of Advisor Recon

6 Things You Might Be Doing To Piss Off Advisors

Advisor Drop-ins: Smart Tactic or Dumb Move?

Wholesaler Masterminds works with individual wholesalers and divisional or national teams to improve the outcomes of wholesaler/advisor interactions.

Please contact us for more information.