Five secrets of the best wholesalers

The popularity of our recent story on a Cogent Research survey concerning advisers’ satisfaction with wholesalers indicates how interested advisers — and wholesalers — are in anything related to fund wholesaling.
No wonder. The men and women who troop around the country and visit advisers on behalf of fund companies are the muscle behind the billions of dollars of fund shares that are bought by investors each year. Knocking on advisers’ doors is a tough (although potentially very lucrative) job that typically gets little attention and not as much respect as it deserves.
I have a soft spot for wholesalers since members of my family were once wholesale representatives in the furniture business. Although I haven’t experienced it myself, I understand the excitement of making a big sale and the frustration and pain of a rude “not interested” hurled in your direction.
Based in small part on my family’s experience and more on conversations I’ve had about wholesaling in recent years with advisers, wholesalers and fund executives, here are five traits that I’ve noticed characterize top wholesalers:
They actually know something. Sure, that sounds snarky, but lots of wholesalers — like lots of advisers, unfortunately — don’t take the time to learn more than the absolute minimum. If a wholesaler can’t go beyond what’s in the sales literature, where’s the value-added? The best wholesalers not only know everything about their own funds, but also about competing funds and investing. They also get to know the particular needs of the advisers they call on, without asking the adviser to spend precious time explaining his business.
In addition to knowing a lot, they also like to share what they know. Teaching an adviser something that helps them help clients, even if it has nothing to do with the fund the wholesaler represents, is a sure-fire way to cement the wholesaler-adviser relationship.
They tell, not sell. This is related to the first point. The best sales reps don’t ever seem to be selling. Especially in today’s market, where there are dozens of funds to meet every kind of need, coercion or a hard close probably is going to be more of a turnoff than a clincher. Educating, explaining and informing are the best ways to win over advisers.
They tell good stories. No, I don’t mean weavers of fiction. Wholesalers have to present important information, but if they’re just peddling numbers and stars, who needs them? They have to be able to put their fund’s message into a compelling context. Most important: telling a story that explains why and how their offering can help advisers and investors.

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In addition to stories about their own funds, they have to share good, helpful stories about other advisers and other fund companies. Advisers and retailers of all stripes love to hear what’s going on in their business. And while InvestmentNews does a terrific job on that front (if you’ll permit me to boast), nothing compares to the campfire-like atmosphere a good wholesaler can engender when telling tales about the business to advisers.
They bring advisers together. Whether this is done in person or virtually, great wholesalers form a community of advisers. About a year or so ago, I was invited to a dinner that an Invesco wholesaler put together for a group of advisers on Long Island. He formed the group among advisers he called on so they could share ideas and help each other. Aside from the good-natured ribbing they gave him, the advisers all held the wholesaler in the highest regard.
They don’t drink the Kool-Aid. Every large organization develops a certain nuttiness, and mutual fund companies are no exception. The best wholesalers buy the company line to a point, but they understand in their gut that advisers come first. After all, fund companies come and fund companies go, but if a wholesaler wants to continue doing what he’s doing, his reputation is really all he has. (That goes for female wholesalers too).
The best wholesalers — or at least those who have been through a few market cycles and want to be in the business over the long run — steer clear of the hot fund of the moment, or at least give advisers plenty of caveats. Like investment bankers of old, they want to be long-term greedy and not short-term greedy. They know that if they take care of advisers, advisers will take care of them.