ETF wholesalers could better service advisorsNews added by LifeHealthPro on September 30, 2013
National Underwriter


Joined: April 22, 2011

By Warren S. Hersch

Compared 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: 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 more than 1,700 financial advisors in the U.S.

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

In comparison, 59 percent of advisors rate mutual fund external wholesalers’ understanding of an advisor’s book of business as “excellent” or “good.” The advisor satisfaction rate with external wholesalers’ ability to recommend suitable product is 62 percent.

Satisfaction rates with external VA wholesalers are still higher: 71 percent (understanding the business) and 78 percent (providing suitable ideas), respectively.

“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.”

Wholesaler satisfaction ratings: Percentage “excellent” or “very good”

Understanding an advisor’s book of business, client profile, etc. Providing ideas that reflect an advisor’s book of business
Mutual fund external wholesalers59 percent62 percent
Mutual fund internal wholesalers47 percent52 percent
ETF external wholesalers49 percent58 percent
ETF internal wholesalers43 percent43 percent
VA external wholesalers71 percent78 percent
VA internal wholesalers57 percent57 percent

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