Research from ETF consulting and recruitment firm Blackwater Search and Advisory and FLX Distribution, reveals that the ETF distribution model may have been changed for good by the Covid pandemic.
Michael O’Riordan, founder of Blackwater Search and Advisory and Andrea Murray, head of Business Development, say that the changes made in 2020 are here to stay, and 2021 business plans are going to reflect a move to more virtual teams.
The pair writes that salespeople will need to become more creative and data-focused, while providing tailored solutions and value-added experience for their clients and prospects.
These are some of the key findings of the report for which research and interviews with heads of Distribution, CEOs, COOs, and CIOs from more than 30 ETF issuers based in the United States, covering approximately USD1.5 trillion in AUM, took place.
The report focused on asset management distribution, and included in its scope the aforementioned ETF issuers, and also a sampling of RIAs, home offices and trading firms, and concluded that no firm plans to do 100 per cent of anything – in person or virtual. The report derives that a firm needs to settle into a world that is heavily virtual with approximately a quarter to half of business done in person.
“The compensation structures will change, headcounts may gradually be reduced, and you will see a smarter, much more integrated digital business plan with marketing,” says Michael O’Riordan, founder of Blackwater Search & Advisory.
According to the report, sales representatives will not be replaced completely, however, technology will increasingly be used to improve the experience and prospect targeting.
“In-person meetings, events and client entertaining will return but in smaller numbers,” says Jillian DelSignore, FLX Distribution, Head of ETFs and Indexing. “The pandemic simply accelerated a trend that was already coming – a move towards more virtual and digitally focused engagement. Gone are the days of flying in and out of cities for one or two meetings. Salespeople can simply be more efficient with their time by embracing technology as a way to engage in certain situations.”
The schtick pitches just will not work anymore – it is critical to intimately understand the advisers so well that you know their needs before they do, she adds.
“In order to remain competitive and current, salespeople will need to be creative with tailored solutions and value-added experience with their clients and prospects and new ETF issuers who do not have the assets or track record to gain access to platforms or model portfolios are circumventing this issue by utilising digital e-marketing,” says Murray.
Business travel will resume, but will be much more targeted and much less frequent, according to the report. Travel budgets are feeling the squeeze, and the beloved expense accounts of the past will evolve to meet the new demands. “The need to travel every day of the week? In one word: Gone,” the report’s compilers say.
Although there are no plans to return to that old way of operating, there will be new opportunities for the technologically inclined as sales teams integrate in smarter ways with data-driven targeting and marketing efforts.
The authors of the report conclude: “The times of dropping a product card on a desk are behind us. It is those who effectively leverage resources like investment strategists, portfolio managers, and data teams that will excel in this new more virtual world.”