Wholesalers Gravitate to Hybrid Model

Hybrid wholesaling—which combines the face-time of external wholesaling with the virtual reach of internal wholesaling—is now active at more than 20 asset managers, according to research from kasina.

The number of firms utilizing this method is expecting to rise as more firms see the profitability of the method. For instance, average total compensation levels for hybrid wholesalers are more than 60% below those of external wholesalers (which is still the most popular wholesaling method). Hybrids are up to 30% more profitable than traditional external/internal wholesaling for asset management firms, according to the kasina study.

So, the hybrid model is likely here to stay. The study notes that the increasingly complexity of the traditional wholesaler-adviser model has changed the way wholesalers work. Asset management firms are recognizing that a pack of advisers at a wirehouse in Chicago and a one-man shop in Omaha do not require the same strategies.

kasina said the current hybrid models vary among firms, but predicts that the “flex model’ of hybrid wholesaling will be where it ends. Under this model, wholesaler roles exist along a continuum, without “internal,’ “external,’ and “hybrid.’ The flex models allows wholesalers to adapt to the shifting needs of distributors, advisors, and their own business strategies, kasina said.