When Targeting FAs, Here's What Fundsters Want to Know Now
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Wednesday, February 24, 2016

When Targeting FAs, Here's What Fundsters Want to Know Now

When fundsters figure out FAs to target and how, three factors are increasingly driving those decisions: the FA's product usage, the FA's channel, and the FA's practice model. Meanwhile, a half-dozen other criteria are losing popularity in fundsters' segmentation processes.

Patrick Newcomb
FUSE Research
Director of Benchmark Research
"Firms are placing more focus on advisors' product usage when segmenting advisors," Pat Newcomb, director of BenchMark research at Fuse Research Network and author of Fuse's new "Cost of Distribution" report for 2015, tells MFWire.

Fuse gathered data from fundster distribution chiefs and national sales managers (depending on firm size), using both interviews and a 50-question online survey. Fuse found that 83 percent of mutual fund firms surveyed now call product usage "critical" or "very important" when segmenting advisors. That's a higher "critical/very important" percentage this time around than for any of the other nine factors. And it's up from last time, the 2014 study, when about three quarters of those surveyed point to product usage as critical or very important.

Channel is also an important FA segmentation factor to even more fundsters, with more than 65 percent calling it critical or very important this time around (third on this year's list), up from around 55 percent last time (sixth). And practice model jumped up in segmentation popularity, too, to about 50 percent (fifth) from about 35 percent (ninth).

Meanwhile, criteria like "advisor's total production with your firm" (fourth this time), "advisor's firm total production" (sixth), "advisor's firm total AUM" (seventh), "number of funds held" (eigth), "interaction preferences" (ninth), and "support requirements" (tenth) all lost popularity, with smaller percentages of fundsters pointing to them as critical or very important this time around.

"With the help of more robust data, firms are developing stronger convictions about the most and least meaningful characteristics to take into account when segmenting financial advisors," Newcomb writes.

The report also digs into a host of other topics, including distribution of sales by channel, wholesaler compensation trends, sales budgeting, and more.

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