Asset Managers Expected to Staff Up Hybrid Wholesalers Post-Pandemic

August 4, 2021 — Boston

Hybrid wholesalers count set to double in size by 2023

The line between external and internal wholesalers will continue to blur post-pandemic. Moving forward, wholesalers will likely use a blend of in-person and web-based meetings to connect with advisors as distribution teams adjust their strategies, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition.

As the landscape remains titled toward virtual meetings, asset managers should continue to leverage the ability of internal and hybrid wholesalers to flexibly execute sales activities. “Advisors’ willingness to engage in virtual meetings has magnified the ability of internal and hybrid wholesalers to gather and retain assets. Resource-constrained distribution teams should leverage the flexibility in staffing this creates to cover advisors more efficiently, while larger groups can use this to deepen the firm’s reach within a territory,” according to Ed Louis, associate director. The effectiveness of the hybrid role while operating remotely has bolstered the case for increasing headcount. According to the research, tier-1 asset managers (those with more than $20 billion in advisor-sold products) expect their hybrid headcount to rise from a median of five in 2020 to 10 by 2023. While not as significant of a bump, internal wholesalers are expected to rise from a median of 23 currently to 26 by 2023.

In addition to evaluating headcount and responsibilities, firms continue to shift larger portions of wholesaler compensation away from gross sales toward other factors aligned with longer-term firm goals. Bonuses based on factors such as net sales or firm profitability accounted for 17% of wholesaler target compensation, and distribution executives wish to increase this to 41%, according to the research. There will also be downward pressure on external wholesaler target compensation depending on the degree to which travel requirements and production shift. “Top performers will likely still be able to demand a premium but will need to demonstrate that they are true revenue drivers,” says Louis.

As retail sales strategies continue to evolve, distribution teams need to structure external wholesaler activity and compensation to align with long-term business objectives and advisor preferences, as well as broader firm initiatives such as profitability and collaboration. “It is important to spell out the factors that impact compensation buckets and to ensure that entrepreneurial wholesalers maintain a sense of control over their destinies,” concludes Louis.

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Note to editors

These findings and more are from The Cerulli Edge―U.S. Asset and Wealth Management Edition, August 2021 Issue.

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