Has COVID-19 Transformed Investment and Annuity Wholesaling?

By Travis Lind, Managing Partner, Hirenomics, Inc.

Prior to the pandemic, asset management firms experienced an extended period of unprecedented change. To achieve greater scale (i.e., reduce costs, improve compliance, leverage new technologies, and broaden product and service offerings), larger asset managers gobbled up small- and mid-sized firms, invested in other asset managers, or acquired select products of other firms. Some outsourced middle- and back-office functions to third parties (to focus on what they do best) and invested in those outsourcing entities. Relatively less expensive asset management and annuity options put great pressure on high-cost providers to reduce the expense structures of their offerings.


It is an understatement to say that sales and marketing approaches taken by mutual fund and annuity companies have changed dramatically during the pandemic. National sales and digital marketing teams were forced to quickly deploy and test new digital sales and marketing communications approaches to reach and engage financial professionals and advisors who are working from home. 


Numerous distribution leaders shared that since March 2020, their national sales teams have actually experienced enhanced productivity, resulting in more meetings per wholesaler, which accounted for more sales. It also provided wholesalers with insights regarding the financial professionals they should focus on most. Several other key factors impacted their results:


  1. Technology – Wholesalers and internal sales desks took advantage of the fact that their target clients and prospects were a bit of a captive audience. As usual, internals could easily reach clients via phone and email.  Rather than wholesalers driving from one appointment to another, doing perhaps 4-6 meetings a day, they were now able to do 10-15 meetings a day virtually, using Zoom or other webinar platforms. This also provided an opportunity to deliver  group video meetings, which took the place of branch lunches and after-the-close meetings.

  2. Market Conditions – The extreme market volatility, early in the pandemic, caused investors to seek guidance from their financial professionals/advisors.  The FPs/FAs in turn, reached out to wholesalers as valued partners, for timely product updates, market insight, and recommendations on portfolio construction.  Naturally, wholesalers saved on usual business expenses like branch meeting refreshments, dining out, golf outings, premium items, and in-person client seminar sponsorships. 

  3. Data Analytics – Firm website, social media post, html email, video conference and virtual event engagement data provided product distributors with the opportunity to analyze FA/FP engagement and tweak their sales and marketing communications approaches to improve their results.  Data analysis has also helped distribution teams to understand how and when FAs/FPs engage and how to better nurture their best clients and target prospects.


During the pandemic, senior distribution firm leaders re-evaluated their business strategies. They considered the need for typical expenses, such as quarterly and annual in-person sales team meetings, frequent business travel, client entertainment, major in-person events, office space, and sales, sales support, and marketing team staffing. Change was inevitable. Some firms cut costs and moved to models in which external wholesalers (supported by their internal sales desks) focus on larger markets, while lower revenue, smaller markets are supported by internals only. 


Since wholesalers have not been able to meet advisors in person, it has been difficult to establish and build new relationships. This has resulted in some distributors seeking to retain and/or hire highly experienced wholesalers who bring established financial professional relationships.  Other firms have opted to move to strictly virtual e-wholesaling teams. 


In addition to all the changes in distribution structures, we have seen an increase in firm acquisitions, which we expect to continue as some mid-size firms are having great difficulty achieving scale.  We expect that firms will continue to observe sales and digital marketing approaches taken in industries beyond financial services and leverage what they learn, to help improve their own strategies.


In conclusion, the pandemic has resulted in an intense period of adjustment and change in the distribution space. Firms that have taken this opportunity to enhance their technology capabilities and digital marketing strategies, and improve the way they measure, analyze, and utilize engagement data, may well become the market leaders as we move to a “new normal.”   

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