Endpiece: Confessions of a Wholesaler

If there is one thing lower on the food chain than a broker, it's a wholesaler. As a managed account wholesaler, my job was to drag myself (and pounds of propaganda) around the country, trying to squeeze in as many meetings a day as I could. I led a peripatetic, if-it's-Tuesday-it-must-be-Pittsburgh kind of existence. Remembering what kind of econobox I had rented was a frequent problem when emerging

If there is one thing lower on the food chain than a broker, it's a wholesaler. As a managed account wholesaler, my job was to drag myself (and pounds of propaganda) around the country, trying to squeeze in as many meetings a day as I could. I led a peripatetic, if-it's-Tuesday-it-must-be-Pittsburgh kind of existence. Remembering what kind of econobox I had rented was a frequent problem when emerging from a branch office and confronted with a sea of cars.

In case you've forgotten, you brokers are a demanding, high-maintenance bunch. You swagger. You know everything. You want us to acknowledge that you are important, and busy. I'm not sure if it was all an act or you were trying to make yourself believe it. Or, perhaps, brokers, humiliated from having to grovel for clients and new accounts, simply love to turn the tables, making the wholesaler do tricks for the fun of it. Big producers are especially tough on wholesalers. “I'll only you give one hour and only for lunch,” said one Houston advisor with a huge book. “I figure, I got to eat. Oh, and I'll only meet you at my favorite restaurant in the Galleria.”

Let's see: In an effort to do business, I have had to peel off tens and twenties for martinis and lap dances (don't tell my wife). I've laid out the American Express card for Yankee tickets, stupidly expensive lunches and dinners (although I did love the Capitol Grill in Boston despite the expense) and various gifts, both sublime (a ready-for-drinking Barolo) to the ridiculous (a T-shirt from the Fado Irish pub in Austin, Texas).

The No. 1 handout requested by brokers? Surprise, money. After giving a presentation, among the first few questions I was asked was: Will you contribute $1,000 to my client appreciation dinner (or fishing trip or golf outing or seminar)? I learned to quit expecting questions about actual portfolio or stock-picking issues until after I had satisfactorily answered that more important query.

Largely, we avoided those kinds of gimmicks. We were too small to afford that kind of stuff. Hell, I was the only marketer for a year. Our giant competitors rained golf balls, T-shirts, mouse pads, CD-ROMs, pens and company-embossed Swiss Army knives on advisors. Us? Nothing. Right there, that cut down the number of brokers willing to make a meeting with me.

We would of course host the cattle-call lunches that branch managers offered us. After getting stuck with a giant catering bill from Prudential's L.A. office once, I learned not to let the branch order the lunch. Fancy pasta dishes and other luxe goodies were too costly for us. Our preferred lunch: sandwiches or even pizza. In a St. Louis brokerage, while I was up at the podium talking about risk-adjusted returns, tax efficiency, our stock-picking process and other important things, I'd see guys saunter in, grab a plate, haughtily survey the sandwiches and potato salad, and, begrudgingly take a heap of everything — and then head back to their offices. (Hey, you're welcome.)

If you had a million or more with us, we would without hesitation participate in your client appreciation dinners or go to your client golf outing or whatever. It was shocking, though. The requests for kickbacks came so fast and so furious, and brokers were so aggressive about it, that we came up with a formula: First, don't even ask us if you haven't the decency to have at least one account with us; and, two, we'll spend up to 10 percent of our management fee we earned from your clients on your dinners, parties, golf outings or seminars.

What I am trying to say is, sometimes I wondered if brokers were simply bought instead of convinced, quod erat demonstrandum, that we were a good solution for their domestic core equity needs. The worst offenders (surely not anyone who would be reading these columns) had the odor of someone who chose asset managers based on the amount of kickbacks that could be extorted. But then, who cares what the wholesaler thinks.

On the other hand, the tendency to refer to your clients by their account size may be so hardwired within you that you may be emoting this to people to whom you do care what they think (i.e. clients and prospects). I'll bet you aren't even aware that you are doing that.

Of course, one-on-one meetings were more productive than the cattle-call sandwich lunches. We wholesalers know what you think of us. It's the old joke: What falls out of a wholesaler's pockets when you turn him upside down? Bologna sandwiches and golf balls.

Writer's BIO:
Aldo Blackthorn
is the pen name of a New York-based writer.

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