Blog What’s the Matter with Advisor Engagement by Channel?

Posted July 6, 2017 by Saadiah Freeman

Many asset managers organize their sales teams by channel. But is this really the most effective strategy? As my colleague Erjon Gjoci found in his analysis of advisor expectations for value-added services, wirehouse advisors and RIAs have more similarities across channels than within.

One important argument that’s often cited in favor of channel-based segmentation is that advisors in each channel do business differently. Certainly, there are some broad trends that can be explained by differences in business model between channels. RIAs, for instance, are more likely to prefer fewer, more in-depth sales meetings, and they value content that’s heavier on data and analysis. However, delving more deeply into advisors’ engagement preferences reveals a more complex reality. As an example, let’s take a look at wirehouse advisors.

Wirehouse advisors are a top priority for the majority of asset managers, and at most firms the same sales team works with advisors from all four wires. However, DST research shows that even within this channel, advisors from each firm have significantly different preferences around communication with asset managers. Notably, Morgan Stanley advisors are much more likely than average to favor in-person sales visits, whereas advisors from UBS are more tech-oriented, with more of them preferring digital interactions than advisors at the other three wires.

Advisors’ Preferred Means of Communicating with Asset Managers

Distribution Solutions Advisor Engagement By Channel illustrationSource: DST Advisor Insights in conjunction with Horsesmouth

So what does this mean for asset managers? Should firms re-organize their sales teams to cover each wirehouse separately?

Leaving aside the fact that this would be highly impractical, it still wouldn’t address the fact that advisors at each wirehouse – and indeed, at every firm – have communication preferences that are only partially influenced by their firm and channel affiliation. In an ideal world, asset managers would have a comprehensive understanding of every advisor’s individual preferences, and know which interactions are most likely to have a positive impact at every stage of the customer journey. However, the asset management industry has a long way to go to achieve this goal. In the meantime, behavioral segmentation – rather than channel-based segmentation – can help sales teams figure out the best way to interact with advisors in their territory.

DST Behavioral Segmentation

Distribution Solutions Advisor Engagement By Channel illustration
Source: DST kasina research

By grouping advisors into buckets based on their behavior, not their channel (or firm), salespeople can quickly assess the interaction strategies that are most likely to play well with advisors.

One thing to keep in mind, nonetheless, is that what advisors want doesn’t always make sense for the firm. For example, Support Hogs love in-person meetings, but have small books of business and limited growth potential. Smart asset managers should find ways to meet these advisors’ need for support in a way that isn’t a big time suck for the sales team, such as with interactive educational content. At the same time, scaling back in-person support for advisors who don’t want or need many meetings, like Technophiles and Self-Sufficients, frees salespeople to focus their energy on the best opportunities, resulting in a sales team that’s more efficient, effective, and profitable.

Saadiah Freeman
Engagement Manager
Research, Analytics, and Consulting

categories: advisor engagement/client engagement, investment strategy, advisor segmentation, buying behavior, ria/rias

The views expressed in this publication are solely those of the author and do not necessarily reflect the position or policy of DST Systems, Inc. or its affiliates, subsidiaries, joint ventures, officers, directors, or management.

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