Expect Changes in Asset Management Distribution Strategy

Some aset management firms are looking to reduce their distribution teams but expand their territories, according to research from kasina.

Although kasina only talked to 12 national sales managers from asset management firms, the asset management consultant said one in four expect reductions to their sales team to be more than 20%. Mounting pressure in today’s economic client and a pessimistic outlook for the future have led asset management firms to try to come up with more low-cost distribution strategies that still maintain adviser coverage, according to a release from kasina. Over the next year, 50% of firms are looking to add internal wholesalers and 42% are seeking to expand their hybrid wholesaling teams.

Five firms (42%) have already reduced the size of the external wholesaling teams. In four of the five cases, the reductions have exceeded 15%. The events in the last month seem to have taken a toll: kasina said in its October survey only 16% of firms planned or had already executed cuts.

Meanwhile, kasina found that 42% of firms expect to increase the size of their sales territories next year. Half of firms plan to either channelize or de-channelize their sales teams in 2009.

“When you combine the revenue hit firms are facing with the significant expense associated with traditional sales models, these actions are inevitable,’ said Lee Kowarski, principal at kasina, in the release. “But with this pain comes opportunity, and we think that the efficiency of hybrid models and an enhanced emphasis on National Accounts can help firms position themselves for long-term success.’

kasina surveyed asset management companies representing more than $1 trillion in assets under management conducted, between November 12 and 18.