Distribution Teams Look to Data to Drive Expansion

September 8, 2021 — Boston

Distribution teams turn to data for faster growth, but system integration and data sourcing remain challenges for many firms

As firms compete for assets in a primarily virtual environment, analyzing the profitability of advisor relationships (45%), identifying the best prospects for wholesaler engagement (42%), and measuring the impact of both wholesaling and digital marketing efforts (30%) have become top priorities. Developing such intelligence, however, requires implementing the proper data systems, sourcing data inputs, and appropriately deploying resources, according to The Cerulli Report—U.S. Intermediary Distribution 2021.

According to the research, 74% of wholesalers feel that prospecting in a digital environment is more difficult. The resumption of in-person meetings will help alleviate this to some extent; however, prospecting will only continue to get harder as more advisors choose to outsource portfolio construction, consolidation shrinks the number of addressable points of influence, and advisor communication preferences evolve. This is in addition to growing expectations that home offices will place greater restrictions on wholesaler access to advisors.

While more than one-quarter (27%) of distribution executives consider identifying best advisor prospects for digital engagement a top priority, many (55%) are faced with overcoming challenges such as insufficient technology infrastructure and data sourcing (35%). On the infrastructure side, this includes challenges with the CRM, sales reporting systems, marketing tools, and the general ability to share data between groups. Sourcing data internally often requires expensive investments in this infrastructure, and even when systems have been updated to facilitate entering information, wholesalers can be resistant to using new tools.

To mitigate these challenges, Cerulli recommends that distribution teams understand the importance of information management as distribution teams increasingly consume more data. “Identifying and deciding how to organize the location of internal data sources is a crucial early step for teams looking to use data,” says Ed Louis, associate director. “The ability to repeatably reduce the time it would normally take for wholesalers to uncover opportunities or guide them toward opportunities that might have otherwise been missed entirely requires the implementation of proper infrastructure, as well as a team dedicated to translating data into actionable insights.”

The research observes that managers with $500 billion or more in assets under management (AUM) are more likely to have advanced data analytics capabilities to fuel distribution efforts than their peers, noting that firms of this size have capital on hand to hire more professionals dedicated to data efforts, acquire data inputs, and increase systems functionality.

In qualitative research interviews with Cerulli, data executives note how frequently distribution teams walk away from data initiatives altogether when implementation fails to generate an instant jump in sales. “The reality is that successfully leveraging data and digital engagement is an iterative process that requires a willingness to experiment and evolve,” says Louis. “When harnessed appropriately, data can help distribution teams increase productivity by identifying the next best actions and opportunities that should be prioritized. By evaluating their use of data, asset managers can become more efficient, more targeted, and ultimately more effective.”

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