3 Ways For Asset Managers To Increase Distribution While Delivering Value To The Distribution Channel
This year, more than any other year in the past, we have received more and more inquiry on our distribution capabilities. The inquiries originated from traditional asset managers to hedge funds to family offices. Why?
There are a number of reasons why a family office would want access to a distribution channel but let’s stick to the traditional asset managers. A reference point to who traditional asset managers are would be BlackRock, State Street, Vanguard, Fidelity, etc. These are very household names in the industry. There are more and more banks and smaller asset managers who are constructing their own funds and ETFs that also want distribution. According to a Bloomberg article, there are now more indexes and strategies available on the market than there are individual stocks! All of these index and strategies probably won’t survive, as they will not attract sizable AUM to keep afloat. Also, Asset managers compete for distribution channel face-time; the distributors are bombarded with phone calls, marketing information, lunches, etc. This brings us back to the opening sentence. More and more asset managers want and need distribution and need to find alternative distribution channels and more importantly new distribution methods to compete in an extremely competitive market coupled with evaporating margins.
So how can an asset manager (XS, S, M, L, XL) execute a different strategy or engage the distribution obstacle in a different way? Let’s take a quick dive into how distribution actually occurs; what drives distribution?
Distribution just doesn’t, “happen.” Distribution is the net result from effective marketing and education, period. Whether the products are the best or if they can make money for investors and cure disease at the same time is not the main driver of distribution. The asset manager’s ability to personalize and convey an effective message, understand the distributors business in conjunction with performance with be the key factors. Distributors don’t want to buy excrement for their clients but don’t want to buy product that they clearly can’t understand and is not pertinent or timely to their clients needs, either.
In order to compete, expand or put the rest of your competition in a chokehold, adapting a digital, cutting edge and constant education, marketing and product delivery vehicle is required. Here are 3 quick steps to ensure growth and adoption of your products:
1. Provide, not offer a portal where your distributors can directly access products and strategies that are timely in their world and their clients’ world. This portal should also provide the ability to buy/sell goods on demand. A portal of this caliber can also provide insight as to who you are reaching and where additional marketing and education efforts should be focused.
2. The portal, which acts as a product delivery vehicle, can also act as a marketing portal that keeps your distributors well informed of new products and up and coming events. This is an extreme value add to your distributors as the portal will assist them in running their business efficiently and effectively. 74% of your distributors have a higher propensity to use your products if you add value, first.
3. The last meeting with your distributor was 4 months ago. The last luncheon you had with your distributors was 7 months ago. Do you know how much of your message they remember? Likely very little but they do remember the great spread you served them for lunch. Distributors need personalized product information that is relevant to their clients at that specific moment. Distributors must deliver and increase the perception of value. Providing them a dynamic portal that can actually help their business grow will ensure you stay top of mind!
In the digital age of wealth management, there are numerous ways a WealthTech company can strategically partner with an asset manager and increase distribution. There is a disconnect between the distributors and asset managers and it seems neither are listening to each other. Distributors want more tools and timely education from the asset manager as they are under pressure to deliver value to investors. Asset managers are competing with one another and the marketing strategy has not changed. The only tool asset managers have to play with in order to compete is lowering fees. So essentially the asset managers are doing the same thing and expecting a different result meanwhile the problem is quite easily solvable.
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