Why Wholesalers Leave the Firm

Yesterday I had a chance to sit in on a conference call by Advanced Sales Corporation that reviewed some of the findings of the 2009 Wholesaler Survey done in partnership with Cerulli Associates.

Knowing that at the time the survey was being conducted the industry was in the throes of tremendous upheaval, the findings still revealed a host of information about the state of financial services wholesaling.

One chart from the survey results stood out for me: Reasons Why a Wholesaler Would Leave a Firm.

It compares the reasons wholesalers gave for why they would leave with the perceived reasons managers gave for why their folks would make a change.

As an example, 72% of sales managers believe wholesalers would leave for higher compensation – and so do 71% of wholesalers.

In looking through the chart data one point leapt out at me as a reason why people leave, and it is something that is completely controllable.

‘Lack of firm vision/strategy’ had a huge disconnect. Only 28% of sales managers thought it would be a reason for defections but a full 50% of wholesalers surveyed citied it as a reason to leave.

Separately a shorespeak survey of wholesalers, that’s is still open for polling, says that a full 69% of wholesalers are contemplating a change to a new firm in 2010 and that the number one reason, given by 35.8% of respondents, is ‘Management direction of firm’.

So is it that the firm lacks direction and/or vision or is it that managers have room to improve in communicating that direction?

Based on the breadth of the two surveys I suppose the answer is yes.

Yes, there are a host of firms that are in need of a better strategic rudder to navigate the ship.

More likely though the leaders in the c-suite, and on the ground, need to keep a better eye on how their vision/strategy/direction is cascading down to employees. Especially those employees, like wholesalers, that don’t have the same benefits of receiving home office messaging in the same manner (or with the same frequency) as home office employees.

Thought starters:

How often is the strategic message of the firm, the channel, or the division communicated to the field?

If this critical message is left to the annual state of the company union, or as an email add on to the CEO’s quarterly earnings call replay, the message will not stick and wholesalers will become disconnected from the vision.

What forms of communication are used?

Too frequently the message is delivered by the CEO and left to be communicated by other managers down the line. Human nature says that the message will be further interpreted and edited as it makes its way through the firm

A memo is not an effective communication tool. Neither is an email.

Conference calls are better. Video conferencing is better still. Small group meetings, town hall functions, c-suite leaders on an occasional wholesaler conference call. All of these promote the message sharing and intimacy that helps get the message through successfully.

What can field managers do to keep the connection between the big picture and the local business engagement alive?

In the wholesaler annual review process, quarterly check points, manager ride-along reports, and telephone interactions managers have an opportunity to tie the local message to the firm’s overall direction.

As much as wholesalers appreciate the independent nature of the position and will state they are fine with being ‘left alone’ perhaps firm’s need to make greater efforts to get the message of the vision, the direction or the strategy out to the field, in a way that sticks, sooner rather than later.

Attn: Divisional Mangers, Channel Managers, National Sales Managers – There is a NEW Mastermind Group starting soon just for you. Modeled after the wildly successful Wholesaler Masterminds, Manager Masterminds is a place for managers to meet one per month with peers and a professional coach. Get more information here.

If you’re a past or present Wholesaler be sure to join Wholesaler Masterminds on LinkedInit will soon become the only LinkedIn group that will post these stories.

4 thoughts on “Why Wholesalers Leave the Firm

  1. Comments imported from LinkedIn:
    Thanks for sharing the Cerulli data and your insights into the importance of developing and sharing the corporate vision from “the horses mouth”. Amazing firms will spend millions on their distribution effort and not a penny on making sure the vision is understood throughout the entire organization. As you point out, there is something to be said for senior managment delievering the vision consistently and frequently. Why do wholesalers leave the firm – senior managment might want to clean the fog off the mirror.
    D. Bruce Johnston Transformational Distribution Strategies Visionary

    Your point is well taken. It is very difficult for a wholesaler to represent a company that he or she does not identify with in some way. Some of the blame falls squarely on the sales management and the C suite. I think you cannot ignore the massive changes that have affected many distribution groups over the past 12-18 months. There have been so many large mergers of fund groups and financial institutions: Wells Fargo Funds/ Evergreen, Barclays/Blackrock, Van Kampen/Invesco, Columbia/Ameriprise and on and on. The amount of change that our industry has experienced in a short amount of time has had a significant impact on wholesalers. Not only do many wholesalers now work for different firms, they may not know much about those firms or their vision yet. Over time that should change, but I am sure there will be a lot of movement as a result as the industry gets its footing back.
    David O’Brien, CFP, AIF Managing Director, New England at Foxhall Capital Management

  2. @David
    Great perspective to consider – will the clarity of the vision catch up with the speed of the change. Had not thought about that angle until your comment. Thanks for sharing it.

  3. Comments imported from LinkedIn:
    Even when management chooses to put forth some vision of the future, often their actions are in conflict with their words. Additionally, all the mergers and changes have led to the destruction of long-standing culture at a number of firms…culture that kept wholesalers engaged and enthused through the tough times.
    Laura Ann Bartlett

    In so many cases, from a wholesalers perspective, decisions are made in that “Ivory Tower.” Meetings are held, metrics developed, HR and compliance consulted. How/when to institute new changes/message and “what’s the spin to the wholesalers” are considered. But in over 30 years I’ve found very few firms that will answer the simple question: “Why?” How does a new vision, program, territory/compensation change help/benefit the wholesaler? The attitude is usually: “This is our decision and you’ll live with it or find other employment.” In all cases, a change should have benefits, either immediate or future, for all involved. As a wholesaler and Sales Manger I have found that wholesalers are extremely adaptable and will find ways to make any “system” work for them. They merely need to hear rational explanations for the actions and what they can “realistically” expect as an upside. If management cannot answer the “why” question and/or show the wholesaler an upside, then the vision/program/change should not be instituted.
    Wholesalers want to be part of the process. Most have a great loyalty to the firm. I have always found it enlightening that, when a sales person is given a preview of a change, questions that the “Ivory Tower” NEVER considered come to light. No one loves change. But, better programs/changes come when everyone can answer the question: Why? If you want to keep your good people, answer the question: “Why?”
    Curt Pollitt Director at Greenwich Carbon LLC

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