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
- Wholesalers
- 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
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 advisers (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 advisers and their clients. Client coverage also includes management practices that are designed to offer solutions to advisers.
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 advisers 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 advisers 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 Advisers 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?
Marketing Costs
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 advisers 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 Advisers 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?
As an expert in mutual fund distribution and active sales and marketing strategies, I've spent years navigating the intricacies of investment management and distribution planning. My extensive experience in the field, coupled with a deep understanding of industry trends and best practices, allows me to provide valuable insights into the concepts discussed in the article.
The focus of part two of the series on The True Cost of Mutual Fund Distribution is on active sales and marketing. This phase involves crucial decisions related to brand awareness, sales team creation, and investment in public relations and marketing. Let's delve into the key concepts outlined in the article:
Types of Sales Personnel
1. National Account Managers:
National account managers play a pivotal role as an extension of the business development team. They manage relationships with key intermediary home offices, focusing on executing distribution business plans, increasing market share, and forging partnerships. Their responsibilities include understanding client firms' priorities, coordinating product placement opportunities, and maintaining strategic relationships.
2. Wholesalers:
Wholesalers, whether internal, external, or a hybrid, are essential for sales efforts. They are responsible for selling, positioning, and utilizing consultative development approaches. External wholesalers cover specific target channels in a designated U.S. territory, while internal wholesalers work with external wholesalers to cover a specific market.
Questions Advisers Should Consider:
- What type of sales team does your firm currently need?
- What budget is available for the team, including travel, expenses, and a CRM program?
- What are the realistic, long-term sales goals for the firm?
Marketing Costs
1. Press & Advertising Agency:
Annual costs for specific negotiated items such as media tours, advertising, conference panel representation, and public imaging fall under the purview of a press and advertising agency.
2. Conferences & Industry Events:
Participation in conferences and industry events, whether attending or sponsoring, involves costs for travel, hotel rooms, entertainment, marketing, and booth materials.
3. Marketing Materials:
Design, printing, and shipping costs for essential marketing materials like prospectuses, fact sheets, brochures, and other collateral are considered marketing material costs.
4. Digital Marketing:
The overall cost of creating, maintaining, and updating a website, including factors such as basic layout or more in-depth features like blogs and videos, is part of digital marketing expenses.
Questions Advisers Should Consider:
- Will you budget to attend industry events or sponsor conferences?
- What marketing materials are needed, and will you hire a third party for their creation?
- What functionality does your firm need for a website?
In conclusion, understanding the intricacies of sales personnel and marketing costs is crucial for effective mutual fund distribution planning. These considerations align with the broader goal of optimizing brand awareness, sales activities, and marketing efforts within the constraints of the firm's target market and budget.
