What advisors do that wholesalers hate…

Not too long ago I read an interesting article about the top six things wholesalers do to tick off advisors.  They included unannounced drop-ins and trying to sneak past receptionists via the voicemail system.  They were all things that I did as wholesaler and also agree are annoying now as an advisor.

But I’ve never read any articles on things advisors do that wholesalers hate.  That’s not surprising of course…  Wholesalers wouldn’t want to seem petty or, even worse, have an advisor suspect their wholesaler is talking about them.  But since I am no longer a wholesaler and unlikely to return here is my list in no particular order of things that advisors did that pissed me off to some degree or another…

1.  Make a meal the first date.  When I call you and you suggest lunch as the first date, I immediately assume you have no respect for me or my knowledge but are only in it for the free meal.  Breakfast is almost as bad but could make sense if done before normal office hours.  Dinner.. You gotta be kidding me.

2. Take my give-aways and not even look me in the eye.  Most wholesalers have spent some time at trade show booths.  And you know what I’m talking about.  I am standing there bored out of my mind hoping to talk to someone.  And an advisor (probably a top producer) is trying to grab six handfuls of your stress balls and highlighters without even saying hi.. let alone pretending to ask about your products.

3.  No shows.  When you are not at your office when I show up even though I called to confirm and am right on time you have shown complete disrespect for another professional.  You couldn’t even call me on the cell number I left for you?

4.  Last minute cancellations… Not as bad as number 3 but still.  I drove 2 hours to get to you and am hanging out at a Starbucks waiting for our appointment and you call 10 minutes before to say you can’t make it?  This is why we end up doing drop-ins.  Because we now have to find someone in east bumf#$@ Ohio to fill in the calendar with.

5. No appointment but asks for a favor.  Seriously?  You won’t return my calls let alone meet me for 10 minutes.  But when something goes wrong or you need a sponsor for your client appreciation dinner, or someone to send you a dozen ProV1’s, or wave our minimum for your gramma’s IRA THEN you give me a call.  Wow!

6.  Eat my Dinner, Take my Tickets, Play Golf and still no appointment.  Okay, you’re god’s gift to top producers.  You came to my group dinner at the conference or took the Celtics Tix I gave you, or enjoyed the greens fees I paid for that round of golf.  Let me be clear… I DID THAT BECAUSE I WANT TO MEET WITH YOU AND TALK BUSINESS.  If you take any of that stuff and then have the balls to say no when I call for an appointment then you are a first class jack-off.

I could go on with this list.  But I think it’s telling that this stuff pisses me off almost a decade since I last wholesaled.  And I’ve tried to practice what I preach now as an advisor.  Most advisors I know have giant egos.  I try not to forget we’re all professionals just trying to make a living.

But one last hint to advisors.  If you do any of that stuff and the wholesaler says “that’s okay, it doesn’t bother me… ” then your wholesaler is lying to you.

If relationships matter, focus on them.

We value our relationship with you.  It’s a common sentiment I hear all the time.  The problem is, there seems to be minimal commitment.  Distributors new found focus on RIAs often smells too much like the idea of the month.  In the past month I’ve had two disappointing phone calls from key contacts at fund companies with whom I do business. In one case, it was a wholesaler letting me know that his territory was being re-aligned and I was being given to the independent broker-dealer wholesaler.  Although he was not happy about it, he said there was nothing he could do.  I felt like a piece of meat getting traded at auction.  In the other case, it was a guy telling me he was being let go because the firm was refocusing it’s efforts elsewhere.  I’m sure that’s not the message they want to send but they essentially severed my only point of contact with the firm.  And no one has called me since.

 Successful distributors in the RIA space do a couple of things well.  First, they position themselves for the long-term.  We tell our clients that they should have a rolling 5-year commitment to their portfolio.  If they can’t, we need to reevaluate their investment plan and perhaps not invest at all.  I suggest distributors think the same way.  Announcing a new “initiative” focused at RIAs or severing relationships with constant territory realignments does not scream long-term.  Neither does “revamping the investment team” or “reorganizing senior management”.  For us, productive relationships follows a lengthy courtship.  It’s not hook up night at the club. You know, you might look good now, but I might regret it later.

 Successful distributors do something else well, they diversify, and I don’t mean portfolios.  They diversify the relationship.  The more points of contact I have with a firm, the more the relationship becomes company-centric and the less it becomes about one personality.  You know the last time I got a call from someone at the divisional or national level of a sales staff?  It was NEVER.  And talking to people on the investment staff at some firms can be like trying to get a hold of the almighty himself.  Don’t worry. I know you think I’ll call the portfolio manager ten minutes before the market closes to ask him for a prospectus.  But can I get a conference call, email, something?  If I’m given one point of contact and it changes, it can be like starting at ground zero.  If I have 5 points of contact and you change one, it’s still business as usual. 

As has been said many times before, this is a relationship business.  They can be built over the phone, through email, social networking sites, snail mail, and in person.  The problem is too many distributors only pay lip service to the concept, not wanting to put in the time, and messing up the ones they do build.  RIAs place a premium on their relationships with their clients and their vendors.  It’s one of the key things that set them apart from their competition.  The challenge distributors have is that these relationships are hard to earn.  The reward is significant loyalty and consistent cash flows in up and down markets, and over long periods of time.  But there are no shortcuts.

The RIAs Guilty Conscious

If you’re going to have any hope of distributing product through RIAs, you need to keep a very important fact in mind.  Our collective guilt is significant and we hate being marketed to.  No, not like we hate telemarketing or junk mail.  We hate that too, but this is different.  Being a fiduciary is a funny thing.  And we can argue all we want about the particulars of what it means.  But most of us believe it means doing the best thing possible for the client and putting their interests first.  But there are always other motivations.  And good RIAs are on the lookout for other motivations that may be affecting their recommendations.  Sometimes we even see them when they’re not there.  And we’re fiercely guarded about the appearance that there could be something other than our clients best interests that motivates us. It’s this compulsive need to avoid outside influence that’s a real problem for product distributors because that’s exactly what you’re trying to do.  

In fact, many RIAs wound up in this business model because of an obsessive compulsion to avoid outside influence.  We want to make the absolute best decisions for our clients free from any outside influences of preferred lists, commissions, broker-dealers, key account managers et al.  Fee only zealotry and NAPFA are the ultimate manifestation of this collective guilty conscious.  We are not saints (although some of us think we are).  But we often see ourselves as sinners on the road to redemption.  And we want to get into financial advisor heaven.  Okay, that’s the last gratuitous religious metaphor for at least 12 months.

In my case I can think of plenty of examples of this phenomena.  And I know I’m not alone.  Case in point.  I have an RIA wholesaler in my town.  He works for a prominent fund company.  He’s a nice guy and I see him regularly at social functions.  He also called on me regularly in an effort to get my business.  We didn’t do anything for years.  But eventually I was looking for a new small cap manager.  His company didn’t come up in my screening and I happened to mention that to him at one point.  He responded by asking me to take a look at his small cap fund and let me know why it didn’t come up.  It’s not something I had done before but I agreed.  I determined that it was a relatively minor variable and eventually ended up using his fund after some other due diligence because I believed it was the best choice.  He got, what was for us, a significant piece of business. 

But throughout that process, I constantly questioned whether it was my relationship with him, or the fund it’s self that made my decision.  I believe I did the right thing.  But the fact that I considered the relationship a possible negative points out the challenges for distributors.  RIAs are keenly aware of the system.  And most of us see ourselves as watchdogs for our clients.  If we’re good, we’re on the lookout for someone who’s trying to toss a steak over the fence and distract us from our job.  No distractions, no bells and whistles.  You’ve got to come through the front door and convince me that working with you is the right thing.

Uhoh, they found me!

I guess once a wholesaler, always a wholesaler.  It’s been seven long years since the last time I strapped on the suit of armor and enjoyed meaningful windshield time in pursuit of the next great producer.  Since then I’ve moved to the “dark side”, what my fellow wholesalers and I referred to as personal production.  In the end of 2002 I voluntarily walked out the door of my last wholesaling gig.  Six weeks later they shut the doors and fired everyone.  Ouch, no severance, no deferred comp payout.  Oh well, I always said you can’t time the market.  Now I’m focused on earning my own clients instead of telling other advisors how to earn there’s.  But I’ve never lost my interest in distribution, the lifeblood of the financial services industry.  It’s ironic really; I coached others before ever playing the game.  I’ve learned that’s not the best way to go.  It’s backwards but so is a lot of financial services distribution.  And it’s given me a unique prospective on the art of marketing to RIAs.  That’s the reason for this blog.  I’m struck by the new focus, on what for most companies is a little known animal, the RIA or registered investment advisor.  Those three letters seem to have become the hot button of financial services distribution. 

When I first started my shop nobody called.  Not one wholesaler.  Now the calls are coming fast and furious.  And every trade rag I read talks about distributors new focus on RIAs.  Despite the mass layoffs and industry consolidation, the demand for wholesalers and others with RIA connections is strong.  I’ve learned a lot over the years and for some reason I feel compelled to share it.  I don’t know if anyone besides me will ever find or read this.  But I’m putting it out there anyway. I hope the people who read it are the folks who are building out distribution channels and the wholesalers who have now decided that RIAs are the holy grail of product distribution.  Good luck, you’ll need all the help you can get.  No charge, make of it what you want, ask questions if you have them, make comments if you choose.