Recovering the lost art of selling

Last week we looked at how sections of the wealth management industry have gradually lost touch with their end customers.

This is actually true of both retail and institutional markets. Many retail asset managers are now largely intermediated by researchers, platforms and large dealer groups; and in institutional by asset consultants.

Some players have responded by focusing the majority of their efforts on these intermediaries instead of the end customer. While this may have been rational, declining knowledge of the customer has been an unfortunate consequence.

The risk of this strategy is that if the intermediaries lose their power, you can lose your access to the market. And this is precisely what we are seeing across retail and institutional channels:

– Many institutional investors are getting much bigger, more experienced, and more confident. They are no longer under the thumb of their asset consultant. Institutions are more interested and more able to make their own decisions, or at least contribute on equal terms to their advisers.

– Individual investors – certainly those with much of the investable assets – are more familiar with investments and markets. Many have grown up with internet banking and online broking. They’re no longer entirely dependent on investment intermediaries such as financial planners and stockbrokers.

– Technology is reshaping access to markets. It creates havoc with intermediation – just look at the travel and retailing industries for examples. Technology makes investments more accessible – consider how much easier it is to invest in an ETF than a managed fund – but it also makes direct access to investors and financial planners much more realistic.

Don’t get us wrong. Intermediated channels will remain important. But the stranglehold of the intermediaries appears to be slipping. You want to get reacquainted with your customers.

What are some practical examples?

– In institutional markets it will mean understanding how the changing nature of the fund’s members will change the shape of portfolios and the types of capabilities and products needed in the future. We will also see $100bn+ super funds in Australia in coming years, and their needs are going to be different from smaller funds.

– In retail markets it will mean being able to talk about real stories and goals, as well as talking about tracking errors and alpha. New products may also be appropriate.

It’s also worth pointing out that some large retail wealth managers are responding to the current environment by drastically cutting back sales teams and narrowing their attention on the largest and more cost-effective intermediaries. While this may make sense financially now, executives also need to be aware of the potential opportunity cost of this strategy if growth slows in intermediated channels.

There’s not enough good marketing and selling in our industry, and simple and accessible sales propositions are too often attached to sub-standard products. Selling can be seen as a dirty word. but it shouldn’t be. At its best, great marketing and selling means developing, delivering and communicating high quality, relevant solutions in response to a deep understanding of the customer. These are the arts lost in an intermediated world which we need to – and can – recover.