Posted January 18, 2018 by Saadiah Freeman
While the biggest firms can afford to put boots on the ground in every region, small and mid-sized firms have to make strategic decisions about which parts of the country they’ll cover with what resources. Historically, many firms have responded to this challenge by designing their territories around "money centers," with senior externals focusing on the biggest metropolitan areas. In an era before sophisticated analytics, this strategy made sense. Major metropolitan areas typically have not only the highest concentration of advisors but also the advisors who manage the most money, so covering these areas with the most experienced salespeople is clearly the logical choice.
Or is it? In our 2017 report, Prevailing in a Changing Distribution Landscape, we wrote about how firms can use analytics to optimize sales coverage models, focusing on the three pillars of Influence, Value, and Opportunity.
To be worth covering, advisors must have a sufficiently robust business to represent value to the asset manager, and must also make at least some of their own investment decisions (rather than outsourcing the bulk of their decision-making to a home office model). In addition, the advisor must represent a good opportunity to the asset manager – and that can often be very specific to the individual firm. An advisor could represent a great opportunity to one firm because they are a power user of products that align with the firm’s expertise, while another similar-sized firm might have little success with that same advisor, because their best products aren’t a fit for the advisor’s business model. As a result, firms using analytics to identify their best advisor matches may well discover that some of their best opportunities aren’t in money centers at all. To cover these remote, yet valuable, advisors appropriately, firms need to think outside the box.
Our upcoming research report, Using BI to Optimize Territories and Set Sales Goals, discusses how asset managers can leverage analytics to identify high-priority advisors and design better sales coverage models, including ways to approach situations like the one just described. Traditionally, small and mid-sized asset managers have covered regional areas with more junior resources (hybrids or internals), or in some cases, not covered them at all. But with analytics giving firms the ability to uncover top opportunities wherever they may be located, this approach is becoming obsolete.
In order to ensure that the best advisor opportunities are covered appropriately, firms should consider flexible, creative sales approaches. For example, if the advisor is likely to respond best to in-person coverage, they could be matched with a senior external from a territory who’s a direct flight away from their location. Alternatively, for top advisors who prefer less in-person interaction, a senior external with fewer in-territory opportunities could spend a day per week conducting virtual meetings with these advisors, traveling to meet them in person once or twice a year. These are just a couple of potential solutions firms could consider. The bottom line is that, over the next few years, business intelligence will fundamentally change the way asset management sales organizations are structured, so sales managers should ensure they’re preparing for a more data-driven and flexible future.
categories: advisor engagement/client engagement, business intelligence, investment strategy, predictive analytics
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.