Unlocking Real Value Blog

AK In The News: Shops Charge Ahead With Sales Hires As Bull Market Runs On

I was asked to comment in an article in today’s Ignites (A Financial Times Service) on the hiring of sales professionals. A recent Cerulli report found that 41% of fund shops expect to add to their distribution sales forces this year. The question is, are these hires simply a reaction to the continuation of the bull market or are they more strategic in nature?

I take the view that they are more strategic, and a response to the expansion of the independent and quasi-indepenent advisor networks. There are more advisors out there working for varied types of sponsor firms. You need to be able to provide support to each of them.

To quote from the article: “RIAs’ and quasi-independent advisors’ growth has driven fund firms’ enhanced sales efforts in those channels, says Andy Klausner, founder and principal of AK Advisory Partners, in an e-mail response to questions. This has led to strategic distribution build-outs rather than full-scale expansions, he says.

“I think a lot of firms learned from the 2008 crisis and have been a lot more prudent in their hiring decisions; the old ways, of always hiring too many people during good times, has changed,” Klausner says.

Fund companies should create three- to five-year strategic plans when expanding their intermediary distribution teams, and adjust those according to firmwide assets, profitability and the effect of market fluctuations, Klausner says. Such planning helps protect against “knee-jerk” staffing cuts, too.

“Distribution is still needed during lean years — to train advisors, meet new advisors, hold hands, etc.,” Klausner says.”

Do you agree, or do you think fund companies are over-hiring?

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