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Creating a Business Continuity Plan for Wholesaling

Posted by Mike McLaughlin on Nov 15, 2010, in Thoughts , tagged with , , ,

A few weeks ago I met with a sales exec from a fast-growing fund firm.  The wholesaling organization has been extremely successful and close-knit over the last few years with almost no voluntary turnover among externals.

As the conversation moved toward planning for 2011, the exec said, “I suspect next year might be the first time we see some people leave.”  This struck a chord with me and got me wondering:  how well do wholesaling teams plan for discontinuity and turnover?

I think the answer is not very well, primarily because things are managed reactively.  Consider the questions that need to be addressed if an external wholesaler leaves:

  • Do we need to replace the wholesaler?
  • How fast can we get a replacement in place?
  • Should we replace the wholesaler from inside the firm?  From another territory?  From the internal sales team?
  • Should we replace the wholesaler from outside the firm?  Who are good candidates?
  • How should the internal wholesaler’s job change in the short-term?
  • How does this impact our territory sales projections?  Our national projections?  Profits?
  • How do we communicate the changes to our clients?
  • How do we communicate the changes to the rest of the team and firm?

Basically, the importance of each field wholesaler makes a transition very complicated.  And concrete answers to all of the above questions are rarely defined in advance.

I’d argue you can and need to plan for turnover.  Three straightforward steps we advocate:

  1. Devise a Tiered Action Plan. The impact of and reaction to a top wholesaler leaving is different than when a rookie external washes out.  Identifying a roadmap for what will happen when various types of wholesalers leave unexpectedly makes the change that much easier to handle.

  2. Continuously Recruit. Hiring is hard.  It takes time, and there are so many variables to consider before an offer can be extended.  Sales managers should not just be meeting potential wholesalers but formally interviewing them even when there is not a clear open position.

  3. Incorporate Turnover into Annual Planning. While sales plans often model good/bad/expected scenarios, rarely are organizational setbacks included into those models.  “Well, our results really suffered when we lost Jim and Pam” is an explanation for underperformance that should be accounted for in advance.

With many firms in the midst of 2011 planning, the time is right to bring business continuity plans to wholesaling teams.

How Wholesalers Can Improve Prospecting e-Mails

Posted by Mike McLaughlin on Nov 11, 2010, in Thoughts , tagged with , , ,

Over the last few months we’ve been collecting e-mails from asset managers to financial advisors.  Most interesting to me are the prospecting e-mails sent by wholesalers.  Why? Because they can be so much better.

These e-mails represent wholesalers’ attempts to get that all-important first meeting with an advisor.  And they almost always have the same two elements:

  • A (usually) short introduction to specific products and/or the firm as a whole
  • A meeting request, typically framed in drive-by fashion (i.e., “I’ll be in the office next Tuesday…”)

I take no issue with either.  The intro and meeting request are necessary.  The problem is that these messages bring nothing else to the table.  Specifically, the e-mails lack a personal element that shows the wholesaler’s done some research and has genuine interest in the advisor.  Without this personal touch, every introductory wholesaler e-mail looks generic.

So how can wholesalers do a better job fostering a connection with advisors via e-mail?  Here are four simple ways:

  • Check LinkedIn. Roughly 40% of advisors are on LinkedIn today.  A brief look at a LinkedIn profile gives insight into schools, interests, common connections, previous employers, and more.  These details can be used to add a personal touch that is more likely to resonate with advisors.  (And, of course, there’s the indispensable Google search.)
  • Cite People the Advisor Knows. Referrals are the best introduction.  But even without a direct referral, wholesalers can indirectly use existing relationships to open doors with new advisors.  The drive-by meeting request has more meaning with specificity:  “I’ll be in the office next Tuesday to meet with your colleague Mike McLaughlin…”.
  • Work with Assistants. Wholesalers can make things very easy for the advisor by offering to schedule a meeting via his/her assistant.  Assistant’s names are frequently readily available; for example, the personal Web sites for Merrill Lynch advisors always include assistants’ names and phone numbers.  And using a familiar first name – “I can coordinate with Bridget” – again adds a personal touch.
  • Avoid Requests from Internals. In some instances internal wholesalers will send initial e-mails on behalf of their external partners.  This signals to the advisor that the external wholesaler is too important to ask himself.  Not good.  To get an introductory meeting, a personal request from the external is a must.

Desirable advisor targets get solicitations for meetings every day.  Investing extra time and effort to send a personalized e-mail can make a difference.

Life (Insurance) is complex

Posted by Anu Heda on Nov 05, 2010, in Thoughts , tagged with ,

As I meet more life  insurance agents and executives, the industry challenges and issues become clearer. Clearer in just how difficult and complex they are.

What if I told you: you could start a business where:

  1. No incumbent has more than 7% market share.
  2. The products are more in-demand than ever.
  3. The press regularly speaks about the products keeping the topic ‘top of mind.’
  4. Buyers cannot substitute a “MacGyver” solution easily.
  5. Your business doesn’t need its own sales force.  In fact there are nearly 400,000 sales people that could sell your product for you.

That may sound appealing.  If you let me continue, I may add:

  1. The industry has the most stringent government regulation.
  2. The average American feels somewhere between apathy and negativity towards the industry.
  3. The products remind buyers about growing old and/or death.
  4. Those products are pretty confusing, even to industry veterans.
  5. Large sections of your Sales force will be selling your product, right along side your competitors.

Now, would you still be interested?  Well, these are just the beginning of issues facing insurance executives. They are both – humbling and exciting.

For Naissance, we’re excited.  We’ve worked with organizations that dismantled big problems into manageable questions and then sought out answers.   In one instance, the question was what sales support and services should we invest in next year and why? That’s a great question that can directly impact sales effectiveness (top-line growth) and cost controls (bottom-line management).

Pitch Book Length is Not Just About Pages

Posted by Mike McLaughlin on Nov 03, 2010, in Thoughts , tagged with ,

It’s become widely accepted that a hedge fund pitch book shouldn’t exceed 20 pages.  It’s a good goal, but it leaves out half the story.

While managers often succeed in keeping pitch books short in terms of slides, they just as often fail to keep them short in terms of words.  I’d argue word count matters more than slide count.

The average adult reads about 250 words per minute.  But reading rate doesn’t really matter when it comes to pitch books.  Near-constant use of the Web has changed the way people consume information, and there’s a lot more scanning than reading these days.  And that most definitely includes PowerPoint.

Consider two startling conclusions from a Jakob Nielsen study:

  • Users read about 20% of the words on an average Web page
  • Users read 50% of the words when there are ~100 words or less

Our experience with pitch books is similar.  Prospective investors just aren’t going to read your pitch book word for word.  And if it’s a live presentation, they’ll read even less (assuming they’re paying attention to what’s being said.)

A good rule of thumb is to avoid going over 125 words on a slide.  Beyond that most pitch books end up with an overly-dense layout or too-small fonts.

Hedge funds should embrace the paradox:  say less to be heard more.

Big Changes for Family Offices Ahead

Posted by Anu Heda on Nov 01, 2010, in Thoughts

Earlier this week, we visited with numerous family office professionals.  At the breakfast, sponsored by Private Asset Management, an expert panel addressed five critical points.

  1. Mergers are coming – Regulatory improvements will lead to more costs for family offices.  Specifically, the changes within Dodd-Frank will create higher compliance costs and therefore facilitate mergers by consolidating compliance staff.
  2. Purchasing power is paramount – Estate tax changes. Currency devaluations.  Capital gains changes.  All these issues (and more) have dramatic impact on the clients within family offices.  The underlying topic is: how do I maintain purchasing power? For many clients, the wealth enables a lifestyle for numerous trustees.  Those trustees may be in different geographies with mixed interest levels in the financial management of their trusts.  What they all care about is that their purchasing ability doesn’t decrease.
  3. Complex stopped selling – The experts discussed how little appetite their clients have for structured products and other complex investments.  The clients still desire yield but not at any cost.
  4. Transparency – Yes; Unique – No – For the foreseeable future, family offices will push investment managers to provide greater transparency. In a post-Madoff world, they remarked, there is little appetite for unique or opaque investment vehicles.  Post financial crisis, it’s a different world; clients are not spending time bragging about an exotic investment.
  5. Education is crucial – Family offices have the unenviable task of providing significant training to young (and soon-to-be) inheritors.  The inheritors need to learn about tax planning, long-term investment planning and managing foundations.  And a single family may have heirs across five time zones.  It’s complex and nuanced without a straightforward solution.

The underlying desire to maintain wealth and purchasing power are simple to comprehend.  Executing on those desires is very complex and uncertain.