Nationwide is revamping its wholesaling efforts for its mutual funds to focus less on in-person meetings with financial advisers and more on working with the
outsourcing asset management platforms that advisers are increasingly embracing.
The move, which affects 34 Nationwide wholesalers, is a response to the trend of financial advisers spending less time selecting investments and constructing portfolios for clients, said Ron Ransom, vice president and head of Nationwide's investment management distribution.
"We're not exiting wholesaling, we're repurposing our focus to distribute our funds on an institutional level," he said. "The industry has moved toward models."
Nationwide has $65 billion under management, including $28 billion in asset allocation models.
Nationwide "is shifting its mutual funds distribution strategy to focus on institutional distribution moving forward," according to the firm's announcement. "The shift aligns with prominent industry trends, including the consolidation of investment decision-makers and technological advances that are shaping the way firms and advisers choose to engage with us to meet the complex needs of their clients."
Mr. Ransom said that instead of meeting with individual advisers, the institutional-level sales team will focus on chief investment officers at larger RIAs, turnkey asset management platforms, consultants, and platforms that are building discretionary models.
Regarding the future of those 34 wholesalers, Mr. Ransom said, "It is too broad of a question to say what will happen to them, but we have over 1,000 open roles within Nationwide. Some may not stay, but this is not a head count play."
Focusing on
levels beyond individual financial advisers makes a certain amount of sense when you consider the trend toward outsourcing.
A report earlier this year by Fidelity Investments' clearing and custody arm showed that 40% of registered investment advisers are outsourcing all or part of the asset management and portfolio construction services they provide for clients.
The research also showed that advisers who are not outsourcing are spending about 40% of their time managing assets and meeting with asset management companies, double the amount of time they want to be spending on those functions, said Matt Goulet, senior vice president at Fidelity Institutional Asset Management.
"Even among the 40% of advisers who are outsourcing, only about 10% or 15% completely take their hands off the wheel," he said. "Some advisers take inputs but are still maintaining some level of control."
While the Nationwide strategy might be a prudent use of resources, fewer wholesalers won't necessarily seem like good news to financial advisers who have grown accustomed to the
expansive web of services and support that wholesalers have come to provide.
"I've been using wholesalers as business consultants, not product pushers, for about 12 years," said Dennis Nolte, vice president of Seacoast Investment Services.
"The ones who help build my business, ask questions about my business, care about my business and don't suggest that everything they offer fits every one of my needs are the ones I continue to work with," Mr. Nolte said. "The best wholesalers know they are a commodity, as are their product offerings. Just like the advisers they serve; they have to be different and provide value to the end user in order to gain any market share or be able to compete."
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