In the future, all national sales teams will function as hybrid or virtual wholesalers to some degree, and we see movement toward that end in the market today. Our recent survey investigates, at length, the prevalence, staffing, utilization and alignment of wholesaler roles. The findings reveal that the roles of the hybrid and virtual wholesalers rely heavily on the size and distribution footprint of the organization with definitions and responsibilities varying significantly between medium-sized managers (with $25B-$100B in AUM) and large managers (with >$100B in AUM). In a post-COVID world in which asset managers are deciding between returning to the norm of their pre-pandemic distribution strategies or evolving towards a digital-first sales process, the utilization and alignment of hybrid, virtual and/or similar wholesalers may be indicative of how firms are positioning their distribution organizations to compete in the challenging environment ahead.
In terms of utilization, the hybrid wholesaler role, which has become quite nebulous due to its varying definitions and firms’ general opposition of the term, exists at more than half of firms (~52%). The virtual wholesaler role lags in current utilization (~30%), but more firms anticipate having the role by year's end (~35%). When comparing the two segments, hybrid wholesalers are twice as prevalent among large managers, whereas virtual wholesalers are twice as prevalent among medium-sized managers.
In terms of staffing, virtual wholesalers, on average, were the least staffed role for national sales teams at just 3.0 FTEs, but should see the largest growth in headcount by year's end, by 1.3 FTEs. Hybrid wholesalers, on average, accounted for ten times as many wholesalers (13.7 FTEs) with headcount staying relatively flat through 2021. When comparing the two segments, national sales teams at medium-sized managers employ twice as many virtual wholesalers, whereas teams at large managers employ 30% more hybrid wholesalers.
In terms of location, virtual wholesalers are typically located wherever the internal sales desk is located, while the location of hybrids varies from firm to firm. Some firms have created hybrid sales desks with wholesalers located in a few key centralized hubs, while others have stationed hybrids in major metropolitan areas to enhance their digital presence while working alongside the local wholesalers. Yet other firms have divided the U.S. into sections with a hybrid in each section, targeting non-wealth centers and non-focus distributors working in a business development capacity. There is no one-size-fits-all approach as these decisions take into account a myriad of factors such as a firm's existing infrastructure, distribution footprint, culture and corporate structure, and each alignment has inherent advantages, cost control and increased collaboration for centralized strategies, agility/flexibility and deeper coverage for decentralized strategies.
In the future, every wholesaler will act as a hybrid or virtual to some degree as the distinctions between roles erode and firms shift to segmenting their salesforce by experience, technical/interpersonal skills, and willingness to travel. However, it seems that during this critical transition period large managers are emphasizing and investing in the hybrid role and sales approach while medium-sized managers have been focusing on virtual wholesalers and engagement.
For more detail on distribution trends, please read our "Leveling Up Distribution in a Post-COVID World" whitepaper or watch our "Digital First Selling: Leveling Up Distribution in a Post COVID World" webinar in which we explore these topics.
Written by Noah Levin
Strategic Business Consultant Advisor