Wholesalers’ New, Transformative Tool Helping Sell Advisors on Funds

In the business of wholesaling investments, Joseph Norton has seen a lot change over the last three decades. The senior regional director at Virtus Investment Partners has witnessed the proliferation of exchange-traded funds, a growing preference for passive over active strategies, and progressively lower fees. Each has shaken up wholesaling in its own way.

But in addition to those developments, wholesaling is simply more competitive than ever, he said.

A lot of wholesaling was once done over long lunches or a round of golf. Salespeople, on the asset manager’s dime, would treat financial advisors in hopes of convincing them to shuffle some of their clients’ money their way. Doing so could deliver better returns for clients, mean little in terms of cost to the advisor, and result in a dramatic payday for a wholesaler.

Those days are no more. Advisors, who are already stressed more than other professionals, are now bombarded with emails and calls from wholesalers and the inquiries are too numerous to respond to every one. The fight for advisors’ time is cutthroat. 

“For the advisor, I think there is an asset manager salesperson fatigue. At the end of the day, advisors are stretched thin. I’ve got to make that time worth it,” Norton said.

To stand out, Norton, like other wholesalers, has adopted a consultative approach to working with RIAs – listening to their problems and suggesting the right Virtus funds to solve them – and a new tool to help: YCharts, the investment research platform founded in 2009 and intended to supplant more costly alternatives like the Bloomberg Terminal and Thomson Reuters Eikon. It covers more than 40,000 mutual funds and ETFs, according to the company.

Asset managers, especially the largest with the most resources, have internal tools to help salespeople show advisors how their funds performed previously, or might in the future, compared to others. Still, when YCharts approached Norton about using it, he was intrigued. 

After trying it out, Norton dubbed it one of the more exciting things wholesaling-related that’s happened to him in a long time and intends to make it part of his regular sales process. “This is a fintech tool that actually speaks to the asset manager and the advisor in the same conversation.”

He uses the tool to prepare charts and data at the ready for specific advisors, shows them fund flows, and pulls up charts to elevate conversations about markets and compare and contrast fund performance. All of that was previously available to Norton in some form or another, but never in a single application. He’s also more dynamic in meetings; able to change data and resources as fast as the conversation topic, which is critical in a time when a meeting with an advisor might last just 30 minutes. The short list of advisors he’s used it with were impressed, he said.

More than two years ago, YCharts had its first conversation about wholesalers using the product with one of the biggest fixed-income managers in the U.S. Since then, YCharts has benefitted from the small circles of wholesaling. Word began to spread and suddenly there were inbound calls from salespeople asking about YCharts, Dave Lubnik, vice president of Business Development at YCharts, said. The company has since hired its own salesperson to pitch the platform to wholesalers full-time.

YCharts offers its product to wholesalers for an annual subscription of $2,400, about a 50% discount, since they don’t use some of its features. At $2,400, the product is still profitable, and affordable for wholesalers paying out of pocket, Lubnik said. 

More than 25 asset managers, including John Hancock and Thornburg Investment Management, and over 550 individual wholesalers are using YCharts. 

Advisors can expect to see more wholesalers using it, too, according to Lubnik. The platform’s growth in the wholesaler market is in “the third inning,” he said.

Greg Feldman, a regional consultant at Thornburg, noticed competitors using YCharts two years ago. Since then, he’s checked it out and introduced it to the rest of the company.

“Historically, for me, I was using Yahoo Finance or Morningstar, which is always helpful. But I found YCharts has a lot more to offer. And, in real time, it allows me to run a comparison that's light years ahead of what we've had in the past,” Feldman said.

That change doesn’t happen the moment a subscription is activated, wholesalers said. Lacking familiarity with YCharts and fumbling around it during a meeting with an advisor could be a disaster.

“Wholesalers need to think about ways to embrace technology. It does take work though,” Norton said.