5 Ways Wholesalers Can Help Build Your Practice (and Your Career)

5 Ways Wholesalers Can Help Build Your Practice (and Your Career)

Written by: Mark Peterson

It’s no surprise wholesalers are important resources for your firm. And their role in your success can extend far beyond their ability to serve as effective product vendors. During my career, I’ve learned wholesalers can be one of your most vital sources of information, guidance, and professional support. The key is identifying those wholesalers who are dedicated to helping you thrive. Here are 5 surprising ways your wholesalers can help build your practice and your career:

1. Wholesalers can help expand your network

Like salespeople in any business, a good wholesaler knows how to build a great network. They meet with advisors every day, work with all the broker-dealers, and talk to (or have worked with) other wholesalers—competitors or otherwise. Better yet, most are more than willing to provide introductions that can offer great value to your practice. Whether your goal is to partner with other specialists (CPAs, estate planners, life insurance specialists), other peer advisors, or simply start new and meaningful conversations, your wholesaler can pave the way.

2. Wholesalers can offer product expertise

Sure, they know the specifics of their own products, but that’s just the tip of the iceberg. Part of a good wholesaler’s expertise is to stay on top of what’s happening across the industry. Even though fixed-income products are top of mind, don’t hesitate to ask for recommendations for a great alternative fund to balance out your portfolio. They will likely know not only what’s new in the market, but also what products are working—or not—for other advisors.

3. Wholesalers can tell you what’s working for your peers

Earlier in my career, when I worked as a wholesaler, my goal was to walk through every advisor’s door with a basket of ideas. New marketing tools. Emerging practice management techniques. Advisor success stories for everything from getting referrals, to deploying new technologies, to marketing a new product. Wholesalers spend all day, every day, talking to advisors like you, so they hear the good, the bad, and the ugly. And because their goal is to help you succeed, they’re usually happy to share their insights.

4. Wholesalers can help your staff be more effective

A good wholesaler should be willing to come on-site to help train your staff, answer questions about product suitability, and show you how to leverage your “closet” of offerings to better serve your clients. They can also ensure your product materials are up to date, verify that only currently available products are being represented, and that you’re providing the latest version of each prospectus and collateral materials to your clients. As a bonus, your wholesaler is often chock full of real-world tips to help your staff be more efficient across the board.

5. Wholesalers can be your broker-dealer matchmaker

If you’re like most advisors, the time will come when you want or need to switch broker-dealers. Whether that change comes about because the BD is closing their doors, stopped carrying preferred products, or you’ve decided it’s simply time to move on, a wholesaler can serve as a matchmaker to aid your search and help you find an ideal fit. Of course, just like people, every BD has strengths and weaknesses. That’s why when advisors ask my advice, my response is always the same: “Tell me what characteristics help you thrive – and also what shortcomings you’re willing to put up with – and I’ll point you in the right direction.”

It’s been awhile since I’ve been a wholesaler, but I still get a call or an email from an advisor at least once a day asking me for advice. I’m happy to help. In fact, after nearly 30 years in the business—including 15 years as a wholesaler and another decade managing wholesaler teams—helping advisors has been one of my key priorities, and I’ve witnessed first-hand the fruits of strong advisor/wholesaler relationships.

In my early days in the business, I met with hundreds of advisors across the country. I quickly realized they all faced many of the same challenges, and many of the advisors I spoke with told me they often felt extremely isolated. My solution was to set up a series of lunches to get local advisors face to face to share their issues, brainstorm solutions, and simply connect. Every time I visited a particular city, I would arrange a lunch with a small group of advisors, and I’d ask them to bring someone who had never joined the group before. The response was fantastic. Soon advisors were calling me to ask when the next lunch was scheduled, and what I used to view as “sales calls” became think tank forums. I was thrilled to learn that a group of advisors who attended these lunches over a decade ago went on to start a study group together and, years later, it’s still going strong.

Of course, every relationship is a two-way street. Your wholesaler’s willingness to help isn’t completely altruistic. But every salesperson knows that relationships are everything. Most sales decisions are bound to default to the vendor with the strongest relationship – and nearly always, that is the wholesaler who has provided not just a great product, but a heck of a lot of additional value along the way.

Mark Petersen has over 25 years of experience leading distribution and sales efforts in the financial services industry. His background includes managing retail and institutional securities sales as well as national accounts, and he has forged strong relationships with broker/dealers and financial advisors throughout his career. Currently Executive Vice President at GWG Holdings, Inc., Mr. Petersen is also a registered representative of Emerson Equity. His previous roles include co-president of Behringer Securities LP and executive sales and marketing positions with CNL Fund Management, Franklin Square Capital Partners, and Madison Harbor Capital. He holds an MBA in finance from Baylor University and a B.S. in business administration from the University of Texas at Arlington.
GWG Holdings, Inc.
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Alternative Beta Strategies: Alpha/Beta Separation Comes to Hedge Funds

Alternative Beta Strategies: Alpha/Beta Separation Comes to Hedge Funds

Written by: Yazann Romahi, Chief Investment Officer of Quantitative Beta Strategies, J.P. Morgan Asset Management

A quiet revolution is taking place in the alternatives world. The idea of alpha/beta separation has finally made its way from traditional to alternative investing. This development brings with it a more transparent, liquid and cost-effective approach to accessing the “alternative beta” component of hedge fund return and a new means for benchmarking hedge fund managers.

The good news for investors is that the separation of hedge fund return into its components—rules-based alternative beta and active manager alpha—has the potential to shift investing as we know it. These advancements could democratize hedge funds and, at long last, make what are essentially hedge fund strategies available to all investors—even those who aren’t willing to hand over the hefty fees often associated with hedge fund investing.

A benchmark for alternatives

With respect to traditional equity investing, we have long accepted the idea that there is a market return, or beta—but this hasn’t always been the case. Investors used to assume that to make money in the stock markets, one needed to buy the right stocks and avoid the wrong ones. The idea of a market return independent of skilled stock selection seemed ridiculous to most market participants. Yet today, we would never invest in an active manager’s strategy without benchmarking it against its respective beta.

Interestingly, hedge fund managers have been held to a different standard. Investors have been much more willing to accept the notion that hedge fund strategy returns are pure alpha, and that their investment returns are based entirely on the skill of the fund manager. That notion explains why investors have been willing to accept a “two and twenty” fee structure just to access what has been perceived as one of the most sophisticated and powerful investment vehicles available.

In thinking about the concept of beta, consider its precise definition—the return achievable by taking on a systematic exposure to an economically compensated risk. In traditional long only equity investing, the traditional market beta has been further refined as a number of other risks have been identified that are commonly referred to as “strategic beta.” These include factors such as value, momentum, quality and size. But no one ever said that these risk factors must be long-only.

Over the past decade, as more hedge fund data became available, academics began to disaggregate hedge fund return into two components: compensation for a systematic exposure to a long/short type of risk (alternative beta), and an unexplained “manager alpha.” What they found is that a significant portion of hedge fund return can be attributed to alternative beta. That fact has turned the tables on how we look at hedge fund return. With the introduction of the alternative beta concept, hedge fund managers will have to state their results, not just in terms of total return, but also as excess return over an alternative beta benchmark.

Merger arbitrage—an alternative beta example

The merger arbitrage hedge fund style can be used to illustrate the alternative beta concept. In the case of merger arbitrage, the beta strategy would be the systematic process of going long every target company, while shorting its acquirer. There is an inherent return to this strategy because the target stock price typically does not immediately rise to the offer price upon the deal’s announcement. This creates an opportunity to purchase the stock at a discount prior to the deal’s completion. The premium that remains is compensation to the investor for bearing the risk that the deal may fail.

Active merger arbitrage managers can add value by choosing to invest in some deals while avoiding others. Therefore, their benchmark should be the “enter every deal” strategy, not cash. In fact, the beta strategy explains the majority of the return to the average merger arbitrage hedge fund. And it doesn’t stop there. Other hedge fund styles that can be explained using alternative beta include equity long/short, global macro, and event driven. Note that the beta strategy invests in the same securities, using the same long/short techniques as the hedge fund strategy. The difference is that the beta strategy is a rules-based version that can become the benchmark for the hedge fund strategy. After all, if a hedge fund strategy cannot beat its respective rules-based benchmark (net of fees), an investor may be wiser to stick to the beta strategy.

Implications for investors

What does all this mean for the end investor? Hedge funds have traditionally been the domain of sophisticated investors willing to pay high fees and sacrifice liquidity. Alpha/beta separation in the hedge fund world means that investors can finally choose whether to buy the active version of the hedge fund strategy or opt for the passive (beta) version. Hedge fund strategies can be effective portfolio diversifiers. Now, through alternative beta, virtually all investors can access what are essentially hedge fund strategies in a low cost, liquid, and fully transparent form. For investors who haven’t had prior access to hedge funds, this could be welcome news. Not only can investors look at an active hedge fund manager’s strategy and determine how it has done compared to the systematic beta equivalent, they can also invest in ETFs that encapsulate these systematic strategies.

When looking at one’s traditional balanced portfolio today, there are plenty of questions around whether the fixed income portion will achieve the same level of diversification it has provided in the past. After all, with yields still low, there is little income return. Additionally, the capital gains that came from interest rate declines are likely to reverse. With fixed income unlikely to adequately fulfill its traditional role in portfolios, there is a need to find an alternative source of diversification. This is where alternative strategies may help. For investors seeking to access diversifying strategies in liquid and low-cost vehicles, alternative beta strategies in ETF form are one option.

Looking for an alternative to enhance diversification in your portfolio?

For investors looking to further diversify their overall portfolio, JPMorgan Diversified Alternatives ETF (JPHF) seeks to increase diversification and reduce overall portfolio volatility through direct, diversified exposure to hedge fund strategies using a bottom-up, rules-based approach.

Learn more about JPHF and J.P. Morgan’s suite of ETFs here


Call 1-844-4JPM-ETF or visit www.jpmorganetfs.com to obtain a prospectus. Carefully consider the investment objectives and risks as well as charges and expenses of the ETF before investing. The summary and full prospectuses contain this and other information about the ETF. Read them carefully before investing.
J.P. Morgan Asset Management
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