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The Asset Class Moving Wealth Managers To Meet With More Wholesalers

A new survey suggests financial advisors are more willing to engage wholesalers. Growing allocations to alternative investments might be the reason.

Private wealth managers, including RIAs, are more interested in engaging with wholesalers from asset managers, according to a new Broadridge survey shared exclusively with RIA Intel.

The survey found that 34 percent of financial advisors want more engagement with external wholesalers, up 25 percent compared to the spring of 2021. Much of that demand is being driven by so-called wirehouse advisors employed by Bank of America’s Merrill, UBS, Morgan Stanley, and Wells Fargo. But 21 percent of RIAs also plan to engage more with wholesalers this year, a six percent increase compared to last year.

Matt Schiffman, principal of distribution insights at Broadridge, believes that advisors’ growing willingness to engage wholesalers is being driven by their increasing interest in alternative investments. Global alternative assets under management are expected to increase by 60 percent and reach $17 trillion between the end of 2020 and the end of 2025, far outpacing global GDP and inflation rates, according to alternatives data and research firm Preqin. 

“There is an increased in interest in new vehicles and different investment vehicles that are coming down the pike, most specifically private equity alternatives,” Schiffman said. “These non-traditional investments require more education and more information to be able to use them effectively and properly with the right client and so the wholesalers can bring value in that.”

Intermediaries are also capitalizing on the growing interest in alternative investments. CAIS, an alts platform used by more than 5,000 advisory firms and valued at $1.1 billion, has raised more than $325 million from investors in 2022. And CAIS competitor iCapital, also used by thousands of advisors, was valued at $6 billion in a round of funding raised late last year. The Chartered Alternative Investment Analyst (CAIA) Association has also had an uptick of designation holders and recently launched its own education platform to help educate financial advisors who want to learn more about alternatives.

Wirehouse advisors and independent RIAs ranked interactions with wholesalers and educational content as either the first or second most valued resource from asset managers. Access to portfolio managers and consultants was the next most-valued resource, especially among RIAs.

The survey “shows to us that even though RIAs typically don't value the engagement with external wholesalers as much as other channels, they still see resident intellectual capital sitting inside the asset management that they want to access and they want to do that through educational content,” Schiffman said.

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Advisors also want to change how they interact with asset managers. Most communication happens on the phone (37 percent) or using email, a website, or some other digital means (28 percent). In-person meetings accounted for only 18 percent and conferences accounted for even fewer interactions.

That could have been a result of the ongoing pandemic. New Covid-19 variants continue to lead to surges in the number of cases and canceled events. Some advisors might also simply be uneasy about gathering at large events and choosing not to go.

Only 5 percent of advisors surveyed by Broadridge wanted to decrease their in-person interactions with asset managers. Most want the frequency to remain the same and 33 percent said they want to have more in-person meetings. Some of those would like those interactions to happen at conferences; 27 percent wanted more conference interaction with asset managers, while 70 percent would keep it the same.

Advisors would like to have more video conferences with asset managers, too.

The Broadridge study was conducted by 8 Acre Perspective, which surveyed 400 financial advisors in March 2022.

Holly Deaton (@HollyLDeaton) is a staff writer at RIA Intel and based in New York City.

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