The traditional mutual fund wholesaler used to walk into an advisor’s office with a pack of golf balls, a factsheet and a high Morningstar rating. No more. In fact, just 9% of advisors say they want to meet with wholesalers at all, according to a recent survey from VettaFi. Yet, the asset management industry still spends $50 billion a year to get in front of advisors and convince them to invest, according to FLX Networks.
The problem is even more acute for asset managers from racial or ethnic groups traditionally underrepresented in the industry. They manage just a sliver—1.4%—of U.S.-based invested assets, according to The Knight Foundation, and generally have fewer resources and employees to scale up a distribution strategy.
That’s what motivated Devon Drew to launch DFD Partners last year. The platform made access to diverse asset managers easier for advisors. Now Drew is expanding the mission, developing technology to better match advisors and managers across a broader set of criteria, needs and preferences.
He’s rebranding DFD Partners to AssetLink with a mission to “streamline the traditionally cumbersome and friction-filled process of fund discovery and distribution.”
With a handful of patents and $1.2 million seed capital in hand, he says the company is developing a machine learning program to build a Netflix-like recommendation engine for funds, matching managers, wholesalers and advisors based on preferences and qualities that go beyond financial metrics.
Previously, advisors searched for asset managers using calculations around risks and returns. AssetLink will add demographics like military status, sexual orientation, faith, race and gender, as well as other unique characteristics. Artificial intelligence comes in via a scoring system, Drew says, scraping, aggregating and sorting data from social platforms, websites and text to help make more appropriate matches between buyers and sellers. For example, the system will take keywords from an advisor’s request for information and map those against diligence documents of managers.
Drew knows the wholesaling game. He spent the last 16 years of his career pitching investment products for asset management firms like Vanguard, American Century Investments, Alger and J.P. Morgan Chase.
“If you only have 9% of the 400,000 advisors that want to meet … you have got to be thinking of a different way to go about getting your products out there,’” Drew said. The goal, he says, is to find an affinity between firm, fund and wholesaler, then use those same attributes to match with an advisor. There are many reasons to consider that approach, not the least of which is creating a positive point of differentiation and relevant talking points with clients. AssetLink has the potential to rewrite the rules around how advisors find asset managers, and vice versa.
Drew plans to launch the platform officially this month, yet already has about 7,300 advisors on a waitlist with 46 asset managers already on the platform and 400 more in the pipeline.
Asset managers pay a license fee depending on the number of strategies and users. The company will have an enterprise option for larger TAMPs and asset managers to integrate the technology or white label it. The company is still considering how to charge advisors.