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Need help building your business case?

Written by Mark Hoven | Aug 16, 2023 10:41:18 PM

If you read our earlier article Is Your Distribution As Good As Your Product?, you may be looking for help to prosecute your situation.

Funny you should ask! We have built a scenario analysis model to help firms quantify the cost savings and revenue uplifts that come from changing their distribution approach to people & process, adviser data and tools. It is a relatively comprehensive input / output model that provides full transparency around logic assumptions and delivers control to the user. This tool can be shared with vendors upon request (complete with a “driving” lesson).

 

Chart 1 – Adviser Ratings Distribution Scenario Analysis Model

 

The best way to road test the model is with a case study to show the sensitivities of different scenarios on the overall investment thesis. The results may surprise, but the key driver in the majority of cases is improving the effectiveness of established, well paid distribution & marketing teams. These improvements generally swamp any extra investment and ongoing costs associated with licensing 3rd party adviser data services and technology applications, especially when considered over a reasonable term of three years.

 

CASE STUDY – Fund Manager “Heikin” (Japanese for average)

Table 1 – Business Settings

Parameter Setting
FUM / average annual net fund flow $5 billion / $250m p.a
Distribution team size 7 sales, 1 enablement, 2 marketing
Distribution team fully loaded OTE $2.73m p.a (includes 30% overhead)
Distribution team assessed quality Sales = Average, change required
Sales Enablement / Marketing = Excellent
Historical staff attrition rate 20%
Annual budgets – Sales T&E | Marketing $250k | $400k (2% revenue)
CRM licensed Salesforce @ $100k p.a
CRM usage & optimisation Limited, more client mgt tool than prospecting
CRM management  Handled internally
Adviser data quality assessment Limited
Adviser data management Handled internally
Platform monthly fund flow reporting Handled internally

 

Table 2 – Scenarios

Action Scenarios
1 2 3
Partially rebuild sales team (over 2 years) Yes   Yes
License 3rd party adviser data source   Yes Yes
Configure Salesforce using 3rd party service   Yes  
Configure Salesforce using internal SME resources     Yes
License 3rd party platform fund flow reporting service   Yes Yes
Improve use of existing / new tools & data Yes Yes Yes

 

Table 3 - Financial Outcomes

Results (on 3-year basis)1 Scenarios ($k)
1 2 3
Net New Investment2 483 95 611
Net Cost Savings3 409 730 1,138
Revenue Uplift4 175 375 425
Net Benefit 147 1,009 952
ROI 24% 1064% 156%
 
Footnotes
  1. Amortised investment over three years as warranted
  2. New investment relates to CRM & API configuration work initially and any team rebuilding costs including recruiting fees. Most investment occurs in Year 1 but team rebuilding spread over two years for sales, and one year for the other teams
  3. Combination of savings in sales, sales enablement and marketing operations though greater efficiencies, together with net differences between existing versus future state costs of maintaining systems, adviser data and platform fund flow reporting (internally or externally through licenses)
  4. Revenue uplift relates to improved business flows (FUM, FUA or other forms of commercial success) from the various modelled permutations and combinations of better teams, data, systems and application.

 

To find out more and to get your FREE copy of the Distribution ROI calculator contact our team.
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