• Al Townsend

The Third Wave

The investment industry is changing very rapidly and the rate of change is accelerating. This can be seen in how the relationship between a client and their advisor is no longer about good investment advice. Clients need and want their advisor to provide advice across all their financial and wealth needs as well as being a trusted coach to deal with the challenges of overcoming the emotional issues that get in a client’s way of making good decisions. 

The investments and portfolio solutions that advisors deliver to clients have now become a commodity that compete based more on the fees, which have to be disclosed. Add to this the ever increasing number of products and investment strategies coming to market every day and you have to ask the question:

How does a traditional wholesaler fit in this new environment?

The answer is they don’t. They are a dying breed just like the brokers that still take meetings with them.  They both think their value is picking the next best performing investment. 

Advisors are changing the way they do business and becoming more critical of how they invest money for clients and who they partner with. Most of the screening and due diligence for investment products is done at the advisor’s firm level and/or through the use of smart software that can run sophisticated diagnostics to identify investments that will meet specific requirements to perform consistently with their role in a client’s portfolio.

This is not new news or revolutionary thinking. Most investment management companies know that the environment has changed and is going to continue to change.  The most important initiative they have tried to implement has been training and coaching to help their wholesalers become more proficient at consultative selling.  The good news is that many wholesalers are becoming more strategic and skillful in learning how advisors invest client’s money and in offering their firm’s investment solutions accordingly.  But the change is not happening fast enough and there are still a good number of wholesalers that have found it very difficult to change their sales habits. And in the absence of a great product offering, their sales are suffering or are at significant risk. 

Every investment management firm that employs wholesaling teams need to take a hard look at their ability to strategically grow and retain assets in this rapidly changing environment.

For over 20 years, TMC Group has been helping investment management firms compete and adapt to the needs of advisors and develop more predictable and sustainable growth. To meet the demands of this current environment, we have developed a progressive series of training programs that can be custom tailored to each client’s business strategy, market focus, product offering, and service/technology capabilities.  The Third Wave program is the culmination of the working experience of Al Townsend and the training that he has done with thousands of advisors to advance their investment business practices and the training and coaching of hundreds of wholesalers across Canada and the U.S.  The following outlines the core components of how TMC Group can work with investment management firms and their wholesaling teams.

The First Wave

Over twenty years ago, investment firms recognized the need to transform their business from product distribution to a financial planning and wealth management business model. This has not been an easy transition for most firms and, to this day, they are still working to develop a holistic client-centric business infrastructure and sales culture that is consistently executed across their sales teams. 

Investment management firms’ objective is to evolve the sales practices of their teams and improve how they acquired and retained assets in the products that the firm offers. Hence, the first wave of training for wholesalers has been to improve wholesalers’ (internal and external) ability to identify investment opportunities by being more consultative.  But old habits seem to die hard and there is a tendency of many wholesalers to revert to the old practices of “pitching” their latest and greatest product (trendy) or the one that has the best performance and lowest fees.

TMC Group provides this first wave of training to ensure that wholesalers have a baseline level of skills on consultative sales practices tailored to their firm’s business strategy and product offering.

The workshops include the following core components:

  • Proactive advisor engagement techniques to establish rapport and credibility

  • Uncovering investment opportunities – needs and problems that the firm’s products can solve to

  • Identifying advisor criteria and requirements for screening and selecting investment products

  • Presenting product solutions based on advisor criteria and overcoming obstacles

  • Evaluating the sales and long-term business opportunities in the advisors’ book of business

  • Communication and presentation skills (closing and relationship management)

  • Territory and business planning

The Second Wave

With the proliferation of new investment/insurance products, positioning good product solutions and differentiating one from another has become much more difficult, even for experienced wholesalers that are adept at the consultative or solution-based sales process. More wholesalers are competing for the same shelf space on the advisor’s product platform and just getting a meeting with an advisor has become extremely difficult.  

Additionally, advisors are cleaning up their books and making the decision to work with a core group of investment solution providers. This means that advisors are looking for more than a great “sales pitch”. This is why the sales practices used in previous years have become less and less effective for wholesalers to acquire and, even more importantly, retain new assets and advisor relationships. 

Wholesalers need to be able to provide solutions that solve to an advisor’s investment needs and challenges on an ongoing basis, delivered through an exceptional selling experience. This will require wholesalers to bring differentiated value to advisors by providing timely and relevant insights on the financial environment and how it will affect the short and long-term outcomes for investor portfolios.  It will require challenging the status quo and moving to the next level of consultative selling.

Second wave training is developed based on the specific needs of the wholesaling team. The following outlines core topics that this training will focus on: 

  • Market Analysis – The objective for training wholesalers to do market analysis is to help them identify a unique or valuable perspective on the current investment environment. This is used to create an insight that highlights a need or problem that an advisor may not have considered and will strategically “provoke” a conversation to uncover if there is an opportunity for one of the wholesaler’s products.

  • Insight-Based Engagement Strategy – This has become critical for engaging advisors by providing insight into a scenario relative to investment challenges they are experiencing in their clients’ portfolios. The insight causes the advisor to think about their current investment strategy, create curiosity and interest, and establish credibility for the wholesaler.

  • Isolate Advisor Buying Criteria – The focus is on strategic questioning that goes beyond identifying an advisor’s screening criteria and uncovers their preferences and perceptions for adding any new investment product. This early engagement ensures that the wholesaler has the right product and learns what is needed to position it in a sales presentation.

  • Educating for Differentiation – A framework for putting together information, including relevant research, is provided to allow the wholesaler to show how the “insight” on investment needs and problems positioned in the engagement process can be solved by an investment strategy offered through the firm’s product solutions. Based on the level of understanding of the advisors, this education is not product specific; it is concept-based.

  • Unique Value Proposition – Every wholesaler needs to have two compelling value propositions: one for the wholesaler’s firm and another for each product solution that solves to the investment insights they bring to an advisor. The propositions need to answer the following questions:

  1. Who is the firm and why is the product relevant today?

  2. How is the firm/product proposition unique?

  3. How will using the firm/product make a dramatic difference to the advisors’ investment business and solve the long-term needs of their clients?

  • Gain Commitment – Wholesalers learn how to ask the “hard questions” around issues, concerns, or questions that can potentially derail a sale. Strategies are developed to advance the sale and gain commitment to implement the next steps for integrating the investment product into the advisors’ portfolios.

The Third Wave

Advisors are keenly aware that the value of their investment advice is coming under a lot of pressure because clients are being influenced by the media and competing low cost providers like the robo platforms. This means that the investment side of the advisors’ business will need to become more efficient and engineered and managed to perform on a consistent basis with the plans they develop for their clients.  This is not an easy task.

Another one of the big changes in our industry is that many advisors do not need feel as though they need to talk to traditional wholesalers to help them with their investment decisions. There is an abundance of information available to them from which they think they can do their own investment research and analytics.  Although advisors may show interest in new products from time to time, the real decisioning on which investments they include in client portfolios is done independent of what is normally offered by investment management firms and their wholesalers.  Sales pitches and investment ideas are not what they want or need.

What advisors really need is a true consultant that understands their investment strategy and is able to provide timely advice to help them build and manage their investment portfolios for clients.

This involves a fully collaborative relationship where the wholesaler is viewed as being knowledgeable and has valuable insights that can be used to manage better investment outcomes for the advisor’s clients.

This will require a wholesaler to be effective as a Portfolio Consultant with the skills and proficiency to execute as outlined in the first two waves above. The advisor will want them to be able to provide a level of objectivity along with investment knowledge/expertise that will be seen as valuable to the quality and integrity of their investment portfolios. 

Training as a Portfolio Consultant is done using the available resources (investment research and portfolio analytics capabilities) of the sponsoring firm.

Core topics that are used as the foundation for this training include the following:

  • Becoming a Portfolio Consultant – Definition and guidelines are established for successfully taking on this role with an advisor.

  • Investment Philosophy and Discipline – A deeper level of profiling is outlined to guide a wholesaler on how to learn about the fundamental framework and guiding principles that are the foundation of the advisor’s investment belief system and how they use it to construct a portfolio. Advanced profiling on how the advisor screens and selects investments, and how they monitor and manage those investments, are part of evaluating the advisor’s investment practices.

  • Portfolio Analysis – This component focuses on how to find the “weak link”, gaps, or redundancies in an advisor’s portfolio solution for clients. The goal is to identify how the wholesaler’s products can be used more effectively to meet the goals and objectives of the advisor’s portfolios.

  • Behavioral Finance – Profiling and communication techniques are provided to understand what influences advisors’ and investors’ decision-making beyond analytics and statistics. These findings can be integrated into wholesaler recommendations and helping advisors to communicate (proposals and account reviews) more effectively with clients.

  • Business Evaluation – Guidelines are provided to help wholesalers evaluate advisor investment management practices to determine how to develop a broader relationship with the advisor through an expanded use of their products.

A progressive live case study format is used to guide the learning in this training.

Note: All training developed for TMC Group’s clients are custom tailored based on a comprehensive assessment of the sales organization’s business strategy and culture as well as the competency level of the sales team members.

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