In the second in a series of three articles recounting our panel discussion from the webinar, Pandemic, Strategic Plans, and Growth, in collaboration with UMB Fund Services, we cover the segment on the challenges and changes facing asset managers with sales and distribution programs in a post-COVID world. (If you missed part 1, you can read it here.)

Panelists included:

• Greg Bassuk, CEO, AXS Investments
• Timothy Reick, CEO, Liberty Street Advisors, Inc.
• Cole Smead, President and Portfolio Manager, Smead Capital Management

The Evolution of Sales and Distribution Post-COVID

Even before the pandemic, asset managers were beginning to realize that the traditional approach of relying on patchwork intelligence, street smarts, and haphazard communication campaigns to connect with prospects no longer cuts it. Nor does the product-centric approach of equipping their sales teams with fact sheets and generic pitchbooks.

Whatever the deficiencies of pre-COVID sales and distribution for many asset managers, they are being magnified as the industry emerges from the pandemic amid dramatic changes in the way advisors and investors prefer to communicate.

We asked the panel to share their insights on the challenges facing asset managers in developing a sales and distribution channel and the trends shaping how they can expect to get their product to market going forward.

Should Smaller Firms Build Their Own Sales Teams?

We asked Tim Reick of Liberty Street Advisors, Inc. whether it’s worthwhile for smaller firms to develop their own sales teams.

“Managing a wholesaling team or coming up with a plan to distribute successfully is a huge task, particularly for firms with one strategy that is most likely to be out of favor for a number of years. Taking on a sales staff and building it yourself, knowing there’s going to be a period when they can’t really go on offense, is a hard decision to make,” said Reick.

Reick continued, “There are third-party marketers out there or ways to collaborate with other asset managers. Building it yourself is onerous, and then you must manage it. I can tell you from the broker-dealer side that managing salespeople is not a fun thing and not something asset managers are typically good at.”

Asked if he agreed that managing sales teams is complicated, Greg Bassuk of AXS Investments agrees. “In certain regions, we saw a faster than expected resurgence in terms of travel and meetings. For us, it confirmed our view that the combination of both traditional boots on the ground and a lot of the next-generation digital marketing going forward is, we believe, going to be a good combination.”

Bassuk added, “Traditional wholesaling will be complemented by the new normal of greater use of email, blogs, videos, and other digital formats.”

This Isn’t a Sales Industry Anymore

Cole Smead from Smead Investments has a sales team of six people, three externals, two internals, and one hybrid, he has developed over seven years. We asked him what type of salespeople he hires, their experience level, and how he trains them.

“We look for people who can deal with intellect and investors. Some of our salespeople have earned their CFP or CFA designation because that’s what advisors have. We look at ourselves as an investment firm. I don’t believe this is a sales industry anymore. Nothing is actually sold to anyone like in the 1980s and 1990s. We educate buyers and they are qualified buyers.”

Smead continued, “They have all the information systems like Morningstar and Bloomberg. Whatever they want they have and more. So, we’re just educating them, and they make their decisions off of the information we provide. So, that’s why I say it’s important to find people who want to dialogue and educate. The days of the gladhanding salesperson are numbered.”

Firms Facing Greater Challenges in Accessing Investor Decision-Makers

One significant trend that precedes COVID is the funneling of all sales calls higher up the food chain to the allocators, gatekeepers, research teams, and platforms, making it much more difficult for salespeople to gain access. We asked Bassuk how he is addressing that challenge.

“Platforms are more difficult to get new funds or new strategies available and approved. In fact, many are looking to shrink their lineup of funds. That’s causing a higher bar around the importance of differentiation and highlighting the length and strength of track records.”

Bassuk continued, “One of the things we’re doing to have more success on the platform level is to have a dedicated national accounts focus. Another critical audience is broker-dealer research teams and gatekeepers. Having this focus allows us to not only get funds approved and available but to also get funds on recommended lists and models.”

The Increasing Importance of Technology in Enhancing a Firm’s Sales Efforts

Technology is playing an integral role in supporting the sales team to make them as efficient and effective as they can be. Looking around the industry, you can find a lot of firms still not using a CRM, and some are still creating pitchbooks by hand. We asked the panel for their thoughts on the importance of technology in enhancing their sales efforts.

“I don’t know how you operate in the world without a CRM,” said Reick. “It’s very hard to get a hold of people these days. With caller ID, people are not taking calls from unknown numbers. It used to be an internal wholesaler would have to make 50 calls a day to set five meetings. That number now is probably 300 if you don’t have the tools to be more efficient. You need to have a CRM that feeds data into the system, so a salesperson doesn’t have to go to multiple sources to get the information they need on a prospect.”

Bassuk agrees. “It used to be that the CRM was a great tool to track conversations and meetings. But, moving into the digital age, what’s great about CRM is that it can easily and effectively be integrated with marketing automation tools. So, in addition to tracking conversations and meetings, it’s also a way for our team to monitor the engagement activities of financial advisors – are they opening emails, are they spending time on our website? Marketing automation brings it all into a more holistic process.”

Bassuk also makes a point about using data analytics to provide digital intelligence that can create a more interactive engagement with targeted prospects and predict which ones are more likely to become clients.

“We’ve been investing in data and technology related to developing better prospects. How do you break through the noise in this environment with advisors getting hammered from emails and podcasts? Data and technology have enabled us to pinpoint investors and advisors who have a higher propensity score – that is, a higher likelihood of being interested in content and information regarding specific strategies,” said Bassuk.

The key takeaway from this is that firms with data analytics capabilities will better understand their customers so they can better align products, pricing, and financial data to facilitate the smooth flow of information to their product development and sales functions. The sales and marketing functions can act more collaboratively to create the support that drives sales.

In the third part of this series from Pandemic, Strategic Plans, and Growth discussion panel, we explore their insights into using digital strategies, content and public relations to build an asset management firm’s brand and reputation.

Dan Sondhelm is CEO of Sondhelm Partners, a firm that helps asset managers, mutual funds, ETFs, wealth managers and fintech companies grow through marketing, public relations and sales programs. Click to read Dan’s latest Insight articles and to schedule a complimentary consultation