It’s been the tradition for product manufacturers in every country in which we’ve worked to market directly to the adviser. Whether ‘marketing’ took the form of financial incentives, enhanced volume bonuses, shelf space fees, conferences, marketing allowances or other value adding services such as practice management, free tools, seminars and marketing support.
The point being that manufacturers have traditionally marketed to the adviser or his/her licensee. No news here! And in a world where the status quo remained largely unchallenged, all was ‘good’. But the world is quickly changing. The status quo is being challenged by clients, regulators and competitors. Costs are escalating, fees are compressing and margins are shrinking.
Everyone, it seems, is looking for ways to reduce costs and increase revenue. From the manufacturer’s perspective the message seems clear – they are being forced to make tough decisions on who they can support, how they can support them and to what level. And while this doesn’t seem extraordinary when said quickly (surely it makes good business sense, right) I have no doubt that the outworkings will prove challenging for many.
The question for manufacturers will eventually get down to: who should we continue to provide support to? And what form should it (the support) take? Or do we walk away from this strategy and look to marketing, social media, sponsorships and so on to get our message out.
For advisers the challenges are perhaps even more personal: do I really need the support I’m currently receiving from my preferred manufacturers? Would I pay for it, if I had to? Should I disclose it to my clients? How will they react? And so it goes.
If your preference is to continue to utilise the resources of manufacturers, the issue will eventually escalate, in my view, to one of proof ie. “here’s why I deserve your support”. Whereas, in the past, this might have been reduced to a simple question of the level of support (revenue or FUM for example), I sense that the parameters have shifted to being more collaborative, to treating the other as a true business partner. Easier said than done I know, but absolutely necessary, I believe.
So, how do you go about proving your ‘worthiness’ as a business partner? To begin, I believe each party needs to share their vision, key business goals and objectives with each other. For only partners who are in genuine alignment will be able to work productively together.
For some advisers this may prove challenging – according to our most recent analysis, less than one in three Australian practices actually have a clearly documented business (or longer term strategic) plan. In the US this stat is a little better. So, for those practices without a documented plan, the place for them to start is with the development of their own plan.
For those practices already with a business plan, why not share it’s high-level goals (and your progress to their achievement) with your key manufacturers?
From the manufacturer’s perspective – when was the last time they shared their plans (including ‘progress to’), with their IFA network?
Of course, for any collaboration to be successful, frequent, personalised and meaningful communication is necessary. And this is a two-way street; advisers should not be backward in proactively communicating to their PDM or BDM for example. If they have surveyed their client base, why not share the results with their manager? If they’re holding a seminar, update the manager. And if changes are about to occur within the practice (new staff, office relocation or system changes for example) – why not share the news?
Finally, it’s hard to replace ‘face to face’ – regular attendance at each other’s events will help cement the relationship. And while we’re at it, is there anything wrong with meeting each year to simply ‘review’ each other’s performance – it’s a two-way street after all.
For your consideration.
Business Health Pty Ltd