Left arm, right arm?
Does anyone doubt the money invested by successful asset managers to generate alpha, or by life insurers to solve the asset-liability matching equation? It takes investment in people and processes, data and technology, working synchronously together.
Why isn’t the same attention to this capability adopted by vendor distribution and marketing teams in the Australian retail wealth management industry? In our experience, they are the poor cousins when it comes to ensuring all four elements are aligned. To some extent, this situation represents a hangover from when banks dominated the advice industry, the channels to serve were narrow, and personal networks won the day. How times have changed!
For example, taking adviser data ROI in isolation, Chart 1 demonstrates that vendor satisfaction is generally average as teams acknowledge shortcomings in the quality of data coverage, depth, and currency. That requirement invariably asks more questions of the quality of data coverage, depth, currency and delivery mechanisms. Regardless, is it realistic to judge ROI on data alone? As an analogy, an asset manager would struggle to determine the unique contribution their Bloomberg financial data feed made to generating alpha.
Chart 1 – Distribution team satisfaction with adviser data ROI (2022)
The increasing importance of retail wealth
It’s time to do it differently! The retail wealth market is now more important to the diaspora of vendors than ever before. The significance of that from Chart 2 should only grow once recent promises by the federal government to reduce advice red tape and improve consumer access are legislated and regulated.
Chart 2 – Retail wealth sector revenue contribution by vendor type (2022)
Where is your firm on the distribution capability matrix?
We have assembled the hypothetical quadrant model in Chart 3 to challenge the local vendor market. Where would your business sit on this capability matrix?
Chart 3 – Distribution capability matrix of people, processes, adviser data and tools
In our experience, the largest investment in vendor distribution capability has been made in the sales, sales enablement and marketing teams. This spend generally dwarfs the combined spend on tools and data by a factor of 10+. Of course, having the right team is critical as this industry is ultimately about adviser relationships and engagement. But there’s so much more to consider. Have the right CRM and business intelligence tools been installed and configured to suit business needs? Have the best adviser data sources been integrated into these technology platforms through open APIs to provide the right information and inform the next best action? Are the distribution and marketing teams actually using the tools-data combination, and following disciplined processes with accountability around outcomes against KPIs baked-in to ensure optimum results?
Every vendor segment is experiencing heightened competition, while the adviser community is more spread and disintermediated than ever before. It’s critical to inject more science into this process:
The gains made by just small improvements in efficiency and effectiveness around these areas can have material impacts on business success. For example, streamlining the “shoe leather” mentality by using better data to help sales teams make fewer trips and shorter trips with a higher proportion of quality meetings and event engagements. For platforms, life insurers, and fund managers in particular, with the largest sales teams amongst vendor types, trimming the 300-400+ adviser meetings per year goal through improved intelligence and audience targeting has numerous benefits.
Chart 4 – Distribution team meeting expectations (2022)
Of course, asking your boss to spend money on changing the status quo, on the promise of big payoffs, is always fraught with danger. Reputational risk, peer ridicule, corporate anguish from previous poor implementations, uncertain future outcomes – ring any bells? And while taking the initiative here makes sense, quantifying the benefits and ROI of improved sales and marketing approaches is often challenging.
So where do you stand on this? Nestled comfortably in the pack, or willing to take some measured risks to do it differently? For help building a business case, please consider Adviser Ratings’ ROI scenario modelling tool.