Cogent Reports: ETF Wholesalers Missing Opportunity With Advisors

etf-news7Compared to their peers who represent mutual fund or variable annuity (VA) products, ETF wholesalers receive significantly lower ratings from advisors for two critical satisfaction measures: effectively demonstrating an understanding of an advisor’s business, and recommending products that are well suited to an individual’s practice. These and other findings are included in the annual Wholesaler Quality Index™, a Cogent Reports™ study from Market Strategies International. The report is based on a survey among a nationally representative sample of over 1,700 financial advisors in the US.

“If a wholesaler fails to establish a genuine connection with an advisor, they’re not just leaving money on the table; the whole relationship is at risk”

For the most part, advisors report they are satisfied with the product knowledge that wholesalers display, as well as their effectiveness when it comes to problem resolution, both important drivers of overall provider satisfaction. However, on matters pertaining to their individual practices, advisors are less satisfied with the ETF wholesalers they meet compared to mutual fund wholesalers that, according to advisors, do significantly better in tailoring their interactions with individual advisors.

Only half (49%) of all advisors who have interacted with an external ETF wholesaler in the prior three months report they are satisfied with the wholesaler’s understanding of their book of business. A slightly higher proportion (58%) is satisfied with wholesalers’ ability to provide product ideas that reflect their book of business. Internal wholesalers fared even worse, with only 43% of advisors reporting that they are satisfied on either measure.

“If a wholesaler fails to establish a genuine connection with an advisor, they’re not just leaving money on the table; the whole relationship is at risk,” says Meredith Rice, senior product director, Syndicated Division at Market Strategies. “ETF product proliferation and evolving business models have advisors searching for new and better ideas, and our research shows they reward the firms that deliver business-building ideas and custom product solutions with increased loyalty. That loyalty translates into dollars invested with the firm.”

Understanding an advisor’s
book of business, client
profile, etc.
Providing ideas that
reflect an advisor’s book
of business
Mutual fund external wholesalers 59% 62%
Mutual fund internal wholesalers 47% 52%
ETF external wholesalers 49% 58%
ETF internal wholesalers 43% 43%
VA external wholesalers 71% 78%
VA internal wholesalers 57% 57%
Source: Market Strategies International. Cogent Reports: Wholesaler Quality Index™, August 2013

About Market Strategies International

Market Strategies International is a market research consultancy with deep expertise in communications, consumer/retail, energy, financial services, healthcare and technology.

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