Slow Growth in Fund Sales Hiring Planned for 2013: Study

NEW YORK - March 18, 2013 - PRLog -- Looking to control costs, distribution executives at mutual fund management firms are planning a modest 2.8% increase in external wholesalers (salespeople who call on financial advisors) for 2013, and slightly larger growth of 6.6% in headcount for internal wholesalers (desk-bound sales support staff).  

Those figures come from a new study from Ignites Distribution Research that identifies trends in sales strategy, staffing, and organizational structures. Ignites Distribution Research is a new competitive intelligence provider to the retail asset management industry that launched on February 20. The report also provides key recommendations for how national sales managers and heads of distribution can make adjustments to their wholesaling teams. Ignites Distribution Research surveyed and interviewed sales managers and distribution chiefs from 20 firms of varying size in late November-mid December, 2012. On average, surveyed firms managed $45 billion in assets.

Asset managers are looking to add additional sales resources but are doing so selectively and with an eye on costs – hence the faster growth of internal wholesalers, who generally cost a fraction of external wholesalers. “The reality is that it’s a tough environment out there. So firms are looking to get more out of their internal sales desks,” says Jesse Mark, senior research analyst and report author. ”While the internal wholesaler’s traditional tools of phone calls and online will never replace an in-person relationship, firms may be able to use internals to cost-effectively service low- and mid-tier advisor relationships. This would free up the external wholesalers to spend time with the firm’s most valuable clients and prospects.”

This report on fund sales forces is the first of many planned reports from Ignites Distribution Research. The new, weekly service will publish reports in the next few months on investment product preferences of top financial advisors, best practices in broker-dealer home office support, and the evolving usage of internal wholesalers, among other topics.

The results of the new report indicate that external-to-internal ratios are slowly decreasing as many firms look to selectively add internals while holding off on large, costly additions to external teams. The ratio of external wholesalers to internal wholesalers was 1.35 externals per internal at the end of 2011, and that fell to 1.22 at year-end 2012. Asset managers are budgeting for a further decline to 1.18 externals per internal for end of year 2013. These findings indicate that more firms are taking advantage of the additional support that can be provided by phone, webinar, and web sites, and are moving towards a 1-1 external-to-internal structure.

*   *   *

About Ignites Distribution Research

Ignites Distribution Research is a new service that delivers original research and analysis on the world of retail fund distribution from experienced analysts. With fresh content delivered straight inboxes every week, its research covers the topics that asset managers must understand, including sales strategy, financial advisor behavior, client segmentation, gatekeeper relations, and more. Ignites Distribution Research is a sister site to the popular online newsletter Ignites, and is a subsidiary of The Financial Times.