What are wholesalers' pay structures like?

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Aug 19, 2009 10:16 pm

I recently had my chops busted (in a very decent way) by a fund wholesaler who said I had done $150k in business with his company this year. He was really good about it, and has done several low-cost seminar/dinners for me ( less than $300 per seminar), but he was wanting to 'make sure I was really on board with them,' ie: send us more business.


This made me wonder - how do fund wholesalers get paid? I imagine there's a sliding scale, but I don't know. What would a $100k ticket pay a wholesaler? How about $250k?
 
Do they get paid differently on A,B,C shares?
 
Thanks.
 
Aug 19, 2009 10:56 pm

Depends.. For smaller boutique fund companies(Calamos) $500-750K/year in tickets is good.. But if you are doing a Mil or 2 with American Funds good luck..

 
Most fund wholesalers get bps off total new money invested.
Aug 20, 2009 9:23 am

alliance bernstein wholesalers get paid on aum I believe.  Most wholesalers are looking for people to do 500k and then work them up to 1 million.  Some wholesalers get bonuses based on how many they bring up to 500k and 1 million.  If a guy has done several seminars for you and assuming he did a good job, you should do more than 150k in biz.

Aug 20, 2009 7:43 pm

I'd like to know that as well, I know it's some type of AUM/ new business formula but I never really thought about it, but I'm curious anyone know some examples?

Aug 20, 2009 11:11 pm

Henry - i totally agree, especially because they do have a nice selection of good performing funds. So I guess his chop-busting worked. I just needed to be made aware. Thanks for the insight.

Aug 20, 2009 11:36 pm
Renter:

Henry - i totally agree, especially because they do have a nice selection of good performing funds. So I guess his chop-busting worked. I just needed to be made aware. Thanks for the insight.

 
You don't owe him anything.  You gave him business and he rewarded you.  Don't let them make you feel like you are indebted to them.  As long as their products are worthy of your practice then continue to use them, but if the products begin to deteriorate and the wholesalers start spewing propaganda simply to "keep you on board" then you're using the products for the wrong reasons.  If you put in big tickets, don't be afraid to call him/her asking for marketing money, but if you don't use the funds/annuities/etc. for a while and they call you giving you a guilt trip, don't start throwing clients to your wholesaler friend just to keep him happy.  Don't get me wrong though, there are some VERY good wholesalers out there, but they are in the minority.
Aug 21, 2009 9:57 am
3rdyrp2:
Renter:

Henry - i totally agree, especially because they do have a nice selection of good performing funds. So I guess his chop-busting worked. I just needed to be made aware. Thanks for the insight.



You don't owe him anything. You gave him business and he rewarded you. Don't let them make you feel like you are indebted to them. As long as their products are worthy of your practice then continue to use them,





+1



Wholesalers work for you. You work for your clients.

Aug 21, 2009 10:20 am

He does not owe you anything either for that matter, works both ways.  If he's working with you, helping to grow your business, and his products are competitive I think you'd be a fool not to use his products.  Nothing is free. Unless the other wholesaler is better looking ... then I might just say screw him and try to do the same to her.

Aug 21, 2009 11:05 am

Wholesalers are clowns. They are what is wrong with the brokerage world (one of the things). You don't owe them anything, but really they do owe you something. They are trying to sell to you. The problem is, they may convince you with some story how great their product is for your clients and you will convince yourself.



Read snags "NLP" thread. Wholesalers are great at getting advisors to think like they do. Screw 'em. Don't take anything from them and you won't feel guilty. Do your own seminars.

Aug 21, 2009 11:12 am
voltmoie:

He does not owe you anything either for that matter, works both ways.


Ohh no, no, no, no...the wholesaler/advisor relationship does not work both ways.  They need us WAY more than we need them.  Without us, they'd be out of business.  Without them, we'd be fine.  We'll just create our own "stories" to tell clients rather than plagiarize their fund families "stories".
Aug 25, 2009 10:58 pm

HERE IS YOUR ANSWER: JUST ASK HIM!!!



Different wholesalers get paid differently. If you feel you want to compensate him reasonably for how he has helped you, ask him how he gets paid and do the backwards math and try as best as you can, while of course still doing right by your clients, to utilize his funds in your practice.



I hope this helps.



Aug 25, 2009 11:53 pm
Wholesalers aren't clowns, just like there are bad advisors...there are bad wholesalers. If you wholesale for a top 10 fund company/manager you easily make over $350k/year. 
 
If you're wholesaler is helping you build your business, and you've only brought him $150k this year, it's time to step it up.  If you're getting support you should at least be bringing a couple mm/year.
 
Usually the top fund family/manager for an advisor gets 60% of flows....In this case the wholesaler knows you are either not serious about his product or not bringing in any money.  Typical comp for a wholesaler is $80-100K salary + 10-12 bps on Gross Cash Flow.
Aug 26, 2009 7:37 pm

Yep, another layer of fees and another company to support on the clients dime.

Aug 26, 2009 8:46 pm

I think Wholesalers can bring value, most top producers/teams talk with wholesalers, it only may be once or twice a year but they keep them on their radar if they are a good wholesaler and know the product and market. A good wholesaler will tell you when to screen out of a fund or stay...some will tell you to hold forever, which may not be right. If a EW helps with client support/seminar, you should be talking their product if it fits the need of the client. People like to do business with people that do business with them. Even fund companies get tight on budgets, they just don't throw it around freely anymore.

Aug 27, 2009 7:48 am
Baba Booey:
Wholesalers aren't clowns, just like there are bad advisors...there are bad wholesalers. If you wholesale for a top 10 fund company/manager you easily make over $350k/year.



If you're wholesaler is helping you build your business, and you've only brought him $150k this year, it's time to step it up. If you're getting support you should at least be bringing a couple mm/year.



Usually the top fund family/manager for an advisor gets 60% of flows....In this case the wholesaler knows you are either not serious about his product or not bringing in any money. Typical comp for a wholesaler is $80-100K salary + 10-12 bps on Gross Cash Flow.





What if the guy who is helping you build your business is a Putnam wholesaler?

Aug 27, 2009 8:33 am
Moraen:
Baba Booey:
Wholesalers aren't clowns, just like there are bad advisors...there are bad wholesalers. If you wholesale for a top 10 fund company/manager you easily make over $350k/year. 

 

If you're wholesaler is helping you build your business, and you've only brought him $150k this year, it's time to step it up.  If you're getting support you should at least be bringing a couple mm/year.

 

Usually the top fund family/manager for an advisor gets 60% of flows....In this case the wholesaler knows you are either not serious about his product or not bringing in any money.  Typical comp for a wholesaler is $80-100K salary + 10-12 bps on Gross Cash Flow.





What if the guy who is helping you build your business is a Putnam wholesaler?



Why would you put a guy and a person infront of your clients and prospects you don't believe in?

Aug 27, 2009 8:51 am
voltmoie:
Moraen:
Baba Booey:
Wholesalers aren't clowns, just like there are bad advisors...there are bad wholesalers. If you wholesale for a top 10 fund company/manager you easily make over $350k/year. 

If you're wholesaler is helping you build your business, and you've only brought him $150k this year, it's time to step it up.  If you're getting support you should at least be bringing a couple mm/year.

Usually the top fund family/manager for an advisor gets 60% of flows....In this case the wholesaler knows you are either not serious about his product or not bringing in any money.  Typical comp for a wholesaler is $80-100K salary + 10-12 bps on Gross Cash Flow.



What if the guy who is helping you build your business is a Putnam wholesaler?



Why would you put a guy and a person infront of your clients and prospects you don't believe in?

 
Who says he's gotta be in front of our clients?  As long as they don't give us over $1,000 (This is my company rules, I'm not sure what EDJ's rules are) they don't have to actually show up to our event.  All our compliance requires is that we have some piece of literature  on hand.  So just put out one of those 20 year quilt charts that show the rate of return of each sector each year that has Putnam's name on it or something.  Perfectly harmless.  There is no rule that in order to get marketing money you have to let the wholesaler pitch products to your client/prospect. 
 
And typical wholesaler salary is $80-$100k??????  Before bonuses??? 
Aug 27, 2009 8:57 am
voltmoie:
Moraen:
Baba Booey:
Wholesalers aren't clowns, just like there are bad advisors...there are bad wholesalers. If you wholesale for a top 10 fund company/manager you easily make over $350k/year.



If you're wholesaler is helping you build your business, and you've only brought him $150k this year, it's time to step it up. If you're getting support you should at least be bringing a couple mm/year.



Usually the top fund family/manager for an advisor gets 60% of flows....In this case the wholesaler knows you are either not serious about his product or not bringing in any money. Typical comp for a wholesaler is $80-100K salary + 10-12 bps on Gross Cash Flow.





What if the guy who is helping you build your business is a Putnam wholesaler?

Why would you put a guy and a person infront of your clients and prospects you don't believe in?





Not sure. Why would you allow a wholesaler to create a conflict of interest because they are taking you to lunch and wowing you with their "story"? I think you use a lot of Franklin Templeton Funds, right? Tell me why.



Those nice American Funds luncheons? Willingness of other wholesalers to pay for your seminars?

Aug 27, 2009 9:05 am

If you're not going to use someone's funds, you shouldn't be taking their marketing dollars.  And I don't think you should use a fund company just because they give you money.  If you have a fund company that you believe in, and you are going to sell THEIR products, and you can help each other build your busiensses together, then you should accept marketing money.  But all this "they need us more than we need them" stuff is garbage.  Act like businessmen, and treat these guys like partners, not some kid on the playground that you can steal lunch money from, just because he'll let you.

 
If you are neutral on what fund companies you use, do your own seminars.  I never use wholesalers because I never sell just one fund company, and my opinions change on the funds from time-to-time.
Aug 27, 2009 9:13 am
B24:

. Act like businessmen, and treat these guys like partners, not some kid on the playground that you can steal lunch money from, just because he'll let you.