(September 11 – 14:45 ET) – Boston-based Financial Research Corp. is undertaking a study of the retail distribution of investment products. The study will zero in on the costs and organizational dynamics supporting wholesaling and relationship management.
Although the study is focused in the United States. it will look at issues critical to all investment managers. FRC points out that good wholesalers are in high demand, pushing the cost of running a typical sales force into many millions of dollars.
It says that for a firm maintaining “modest national coverage” in the U.S. the cost of wholesaling will be upwards of US$18 million a year. This amount is based on estimates of 40 external wholesalers at US$400,000 each and 40 internal wholesalers at US$55,000 each, numbers that come out of a 1999 FRC study on distribution costs.
FRC says high costs and an increasingly crowded marketplace have many financial services firms looking for alternatives. “Instead, to get maximum value from distribution relationships, many firms are making fundamental changes in how they approach wholesaling and relationship management.”
The new study aims to analyze those changes looking at such components as: expenditures necessary to finance an effective wholesaling and relationship management effort; new and existing sales and relationship management models; the critical differentiators for firms to gain, and keep, shelf space; and which distribution channels are selling more now and why.
The study should be completed this fall and will survey multi-product shops, mutual fund manufacturers, and insurance product manufacturers.
-IE Staff