4 Reasons Why Advisors Stopped Working With Wholesalers

We recently stumbled upon this letter from a financial advisor to a wholesaler, and we couldn’t have found a better illustration of why the traditional wholesaling model is at a “change-or-die” inflection point.

Dear Wholesaler,

Believe it or not, I do respect you. You own the responsibility of presenting your company and its products to a wide range of financial advisors like me. You work hard and you are committed. That’s meaningful. Despite these admirable qualities, however, I need to tell you we are at a crisis point in our relationship. And I thought it was important to tell you why.

So here it goes...

1. You have pressured me to play golf at your country club and invited me to baseball games and expensive dinners more times than I can count.

Here’s the deal: I’m a crappy golfer, the Orioles are dismal and I’m 20 lbs. overweight. These are not activities that bring joy to my life, improve my physical condition or help my business. Please stop asking.

2. Your internal wholesaler left me 17 voice messages last month! I counted them.

He was asking me to schedule a meeting with you to discuss a new strategy he was certain I’d like. First, I don’t have time to return wholesalers’ calls. Second I don’t need a new strategy. And third, 17 voice messages?! REALLY?! This is badgering, and it makes your company look desperate. If I need something, I’ll contact you. Please stop calling.

3. Your marketing team sent me a 12-page brochure highlighting the 7 Steps to Effectively Managing your Practice.

I didn’t request this, but clearly, you must have believed I needed it. Thanks a lot. Are you suggesting I’m not managing my business well? Here’s a suggestion: No more random mailings. It’s wasteful. Save your money and instead, consider lowering your fees! Please stop sending.

4. Your customer service team just changed my support rep for the fourth time this year.

I assume there is a valuable reason why you rotate chairs with this degree of frequency? Know this: Every time you assign a new service rep to me, I have to start over and re-educate your staff on my business, my pain points, my preferences. Please stop this practice.

Despite all these annoyances, however, there is a service you could provide to me that could save our relationship. Do this one thing for me and I’ll give you, your company and your products fair consideration for use within my clients’ portfolios. What is it?

Help me grow my practice.

That’s it. Show an interest in my success and help my business grow. Oh, but there is one catch. We won’t do this the traditional way; you know . . . hosting educational seminars and client appreciation events, cold calling and direct mail. You and I both know these approaches don’t work today. Instead . . .

Show me how to find good prospects online and earn their business.

If you can guide me in the art of earning new clients in this digital world, then we may have a long and mutually-beneficial relationship. That’s my request of you. Are you up for an entirely new kind of advisor-wholesaler relationship? I am.

Regards,

John R. Smith, CFP

So, what can we learn from this letter?

The above letter illustrates the main issue in today’s wholesaler/advisor relationship. The distribution model that has been used by insurers and asset managers for the past 2 decades is broken. Gone are the days of rounds of golf and wine and dine meetings…

Advisors today would rather trade in a steak dinner for one marketing qualified sales lead. The rise of technology is pushing wholesalers to reinvent themselves as tech-enabled experts who can bring new ideas to the table. In order to stay relevant, wholesalers need to understand how to leverage new technological solutions in today’s digital world.

This advisor’s letter is a reflection of that needed change and is a cry for Inbound Marketing, something we here at GK3 Capital have been helping clients embrace for years.