Over the last year, the investment management industry has seen major changes affecting the way advisors do business and their clients’ expectations of them. Those changes also have made a difference in what they expect or should expect from their investment wholesalers. A distributor doing business exactly how it was done a few years ago is not doing advisors a great service. Instead, advisors need a distributor that has kept pace with market trends and developments. Whether relating to regulatory developments, FinTech or diverging customer preferences, distributors must be held accountable to deliver the service today’s advisors need.
What Advisors Want Most from Distributors
If knowledge and market intelligence are what you, as an advisor want from your distributor, you are not alone. WealthManagement.com recently published survey findings which found that what advisors most want from their wholesalers is knowledge. Of the advisors surveyed, 31% listed “investment and product knowledge” as their first priority of information sought from their distributors. The information they sought from their distributors ran the gamut from updates on existing, competing and new products; to knowledge of portfolio construction, asset allocation, financial planning and even the advisor’s practice. Whether advisors realize it or not, their distributors do have a significant impact on how they conduct their business, especially when it comes to matters of product selection, outlooks on capital markets and portfolio adjustments.
The Hallmarks of a Dynamic Distributor
Distributors, who can demonstrate value by delivering the knowledge and information their advisors want, are those who will help take a wealth management/financial advisory practice to the next level. These are the distributors who proactively seek out new products that will help advisors’ clients meet their financial goals. They are the distributors who carefully assess the products they offer and do not jump on every new fund or investment just because it’s “hot” today.
Another trait of these distributors is their own professional development. Many have applied themselves in various roles within the investment industry and understand the nuances of being a wealth manager, investment advisor and/or financial planner. Some have pursued advanced degrees and/or professional certifications/designations attesting to their greater knowledge of investments, insurance and financial planning. While the designations differ from nation to nation, the meaning is the same: these are professionals who take their roles seriously.
Lastly, the distributors to seek out in 2019 are those who really know an advisor’s business and have done their homework on an advisor’s practice and needs. The days when a distributor can be a great fit for every advisor are long gone. Just as advisors target their best clients, so too should you expect distributors to target the advisors for whom they are the right fit. This goes far beyond product offers. It extends to having the ability to provide the data and support (i.e., in portfolio construction strategies, asset allocation, etc.) that will help an advisor succeed with a specific target client base.
Disruption Ahead- Choose Partners Wisely
Especially during turbulent times of heightened disruption from new regulations, technologies and shifting customer expectations, the partners you choose are critical. You need partners who will bring added value to the relationship, exceeding advisors’ expectations so that they can exceed their clients’ expectations and grow their practices. The best distributors have more than a surface understanding of an advisor’s practice and business goals. Additionally, they are accessible, provide information on a regular basis, and offer a selection of sound products to bring to their advisors’ clients. Don’t settle for less.