Join us for part two of a three part series on The True Cost of Mutual Fund Distribution. Part one focused on product placement, click here to read it first. Part two focuses on active sales and marketing. Part three focuses on tracking capabilities, click here to read it now.
Active Sales and Marketing
The next phase in distribution planning are the avenues in which investment managers will seek to raise brand awareness and create sales and marketing activity. The most common considerations are the creation of a sales team, investment in various public relations and marketing, and sales related activities. The extent of the distribution efforts are closely tied to the individual firm’s target market and budget.
Types of Sales Personnel
- National Account Managers
- External Wholesaler
- Internal Wholesaler
National Account Managers
National accounts, key accounts, and relationship managers are an extension of the business development team. They focus on interfacing and managing the overall relationship with key strategic intermediary home office relationships. Key account managers are charged with creating and managing the execution of distribution business plans through coordination with all interested constituents. They work towards forging partnerships, with an emphasis on increasing market share, through leveraging all centers of influence and “delivering the firm.” Key account managers proactively work with the investment manager to uncover product placement opportunities. They are tasked with understanding the client firm’s strategic priorities, search activity, product and marketing initiatives, and opportunities for engagement. It is the national account manager’s responsibility to develop and maintain strategic relationships with all centers of influence. This individual also positions strategies and portfolio construction ideas to home office audiences, manage all dealer agreements, participates in contract negotiations, and is the interface with the transfer agent. They also coordinate all marketing, sales, and support services, anticipate and resolve complex problems, and disseminate intelligence to the sales force and home office to improve sales execution.
Wholesalers are categorized as internal, external, or a hybrid of the two. Wholesalers are typically paid commission only or a combination of base salary plus commission. There are also third party marketing organizations that offer individuals or teams for hire. There are several key items to consider when hiring wholesalers. The wholesaler should have experience in the desired strategy and have existing relationships or proven ability to build relationships within the territory. They should be able to not only sell, but also position and utilize consultative development approaches, as well as contribute to marketing ideas and utilize CRM programs. Above all, you want to hire an individual who will blend with the company culture and be a positive addition to the sales team.
External Wholesalers – External wholesalers, often referred to as regional directors, cover specific target channels (independent broker-dealers, registered investment advisors (RIAs), broker-dealers, bank and trust, insurance and retirement intermediaries) in a specific U.S. territory. External sales representatives tend to have established relationships and focus on positioning and selling the investment manager’s strategy and funds. They have strong communication skills with the ability to convey traditional and complex products in a concise manner to both advisors and their clients. Client coverage also includes management practices that are designed to offer solutions to advisors.
Internal Wholesalers – Internal wholesalers work with external wholesalers to cover a specific target market. Much like externals, they are expected to have the skills necessary to cultivate and maintain relationships within their designated territory. They contact the advisors in their territory regularly and manage the sales process. Internals respond to daily telephone inquiries, follow up with financial consultants who establish new business, and continually educate them on current products and upcoming new products. Internals should have the ability to converse knowledgeably with financial advisors and other key personnel about investment solutions and current economic and market conditions and provide account activity and sales reports to assist the sales team.
Questions Advisors Should Consider
- What type of sales team does your firm currently need?
- What type of budget do you have for a team? Do you have/need a budget for travel, expenses, and a CRM program?
- What are some realistic, long-term sales goals?
Each investment manager has specific marketing goals. Some investment managers will seek the services of a third party press and advertising agency while others may hire an in-house employee. Investment managers should consider the type of marketing opportunities that make sense for their firm, budget, target market, and overall goals. Marketing channels can include items such as industry or broker-dealer conferences, email campaigns, promotional items, hosting lunch and learns, and your website.
Types of marketing costs
- Press & Advertising Agency
- Conferences & Industry Events
- Marketing Materials
- Digital Marketing
Press & Advertising Agency – Annual costs for specific negotiated items that may include but are not limited to media tours, bylines, advertising, conference panel representation, and public imaging.
Conferences & Industry Events – The financial services industry offers many national, regional, and local conferences. Conferences may be hosted by third party intermediaries, such as broker-dealers, custodial firms, service providers, associations, and research organizations. Attendees may range from savvy investors, research analysts, financial controllers, financial advisors to investment managers. Each conference will have specific costs, depending on if you would like to sponsor or simply attend. There are costs for attending or sponsoring but there may also be costs for travel, hotel rooms, entertainment, marketing, and booth materials.
Marketing Materials – Example of marketing material costs would be the cost of design, printing, and shipping of the prospectus, fact sheets, brochures, and other marketing materials.
Digital Marketing – This includes the overall cost to create, maintain, and update a website. Service may begin at basic layout or a more in-depth website including blogs and videos. Pricing is dependent on the extent of the services needed.
Questions Advisors Should Consider
- Will you budget to attend industry events or sponsor conferences? Which ones would you like to attend?
- What do you need for marketing materials? Will you hire a third party to create these materials?
- What functionality does your firm need for a website?