Wholesale Help

Darren Gray's branch manager walked up to him one afternoon in 1998, tapped him on the shoulder and asked a question that made him cringe.

How would you like to be the branch's mutual fund coordinator? he asked.

Gray, a producer with Merrill Lynch in Fort Wayne, Ind., shuddered at the thought. He hated those wholesaler lunches and his branch manager knew it.

When I started in the business, these lunches were more product-oriented, and you saw wholesalers come in to talk about their hot product, Gray remembers. The brokers who went to the lunches kinda felt compelled to buy some of the fund from that individual. So you'd see sporadic blips from different fund families based on the lunch rotation.

So, Gray politely declined his manager's invitation. He told him he just wasn't interested.

I already worked with a core group of fund families that I was comfortable with, he says. I didn't want to confuse myself any more by listening to another mutual fund manager.

But there was one small problem. Branch Manager Fred Schumm wasn't really asking a question: He was making an offer Gray couldn't refuse. My manager closed the door and said that wasn't what he wanted to hear, Gray says, laughing.

After some gentle arm-twisting inside Schumm's office, Gray saw things his way. He reluctantly accepted the job a position that didn't pay anything, ate away at time he could be devoting to his clients and generated very little appreciation from his fellow brokers. It was a thankless job, he thought.

Attitude Adjustments

Today, Gray's attitude toward his position has turned 180 degrees. After four years, Gray considers the appointment one of the best career-boosters he's had. Now, he thoroughly enjoys scheduling the same wholesaler breakfasts, lunches and cocktail hours that used to ruin his appetite. The rewards are plentiful, he says.

Wholesalers generally have very current information, Gray says. We're not just having these guys come in, do lunches and talk about their funds.

For example, Dreyfus hires independent consultants to conduct workshops in the branch on topics such as organizing an effective presentation or implementing a linear sales process, Gray says.

In addition, wholesalers are privy to a pipeline of insider information about trends in the industry. They are also full of interesting tidbits about brokers at the competition and they share those insights with fund coordinators in private, Gray says.

The old product pitches are history. In as much as we advisers are trying to further our relationships by being more consultative, we're seeing the mutual fund companies and their representatives go toward that approach as well, Gray says.

Enterprise Funds wholesaler Mike Woerner adds that brokers often find that becoming a product coordinator is the first steppingstone to management. Brokers who consider their coordinator responsibilities a nuisance baffle him.

Every time I visit a branch office I have something to offer, whether it's something about a mutual fund or the economy, says Woerner, who covers Wisconsin, Illinois and Indiana.

Woerner knows something about what brokers want from wholesalers because he was a retail producer and a mutual fund coordinator himself in a previous life, working for Merrill Lynch and Salomon Smith Barney from 1979 until he defected to the mutual fund side in 1992.

I've walked in their shoes, Woerner says. I've never understood why some coordinators don't let anybody in. There's always something to learn.

Career-Building Benefits

At the Merrill office in Fort Wayne, the door is open to all wholesalers from all fund companies, Gray says. Unlike other firms, Merrill has no select list of fund companies that he can or cannot welcome. The real payback for being the branch's mutual fund coordinator is all those bull sessions with wholesalers, he says.

It's kind of like reconnaissance, Gray says. There may be some guy at Smith Barney in Peoria, Ill., who has some marketing ploy that's working very effectively for him. But as a Merrill Lynch representative, I'd never hear about that if not for the wholesalers.

Likewise, John Yagla, a $500,000 producer with Dain Rauscher in Oakbrook Terrace, Ill., says he's first to know about things happening in the industry because he's connected to the wholesalers. Yagla has been a retail broker for 11 years, has about $50 million in assets under management and has been mutual fund coordinator in his office for about two years.

There may be some guy at Smith Barney in Peoria, Ill., who has some marketing ploy that's working. I'd never hear about that if not for the wholesalers.
Darren Gray, Merrill Lynch

Gray's relationships with wholesalers have also opened some doors with fund managers. In fact, Gray was successful in getting Greg Hahn, a fixed-income fund manager with Conseco Capital Management, to speak about market conditions at one of his client appreciation dinners. Conseco is headquartered in Carmel, Ind.

I ask those people who I support to support me, Gray says. In other words, if I am not buying AIM Funds, I'm not going to have the gentleman from AIM invest his time and money in my presentation.

Gray spends about 30 minutes each day scheduling lunches and group meetings, and coordinating one-on-one chats between wholesalers and the 40 other reps in his branch.

For other brokers considering taking on the commitment, Yagla offers two pieces of advice. Try to get paid something, he says. (He receives a small salary for his contributions as mutual fund coordinator.) And use some of the mutual fund company resources to help build your business. A lot of these companies will help out with things like seminars and marketing expenses.

At the same time, don't allow wholesalers to take over, Gray advises. Coordinators should be prepared to turn some away. Fortunately, wholesalers have large enough sales areas so that they're not on us every other week, he says.

Two-Way Street

If wholesalers and coordinators cooperate, things work well. For example, if Gray knows a particular broker isn't interested in meeting with wholesalers at all, he gives the wholesaler some warning. He also shares insights into the personalities and pet peeves of the reps.

He'll tell me not to call this guy in the morning, take this guy out for drinks or this guy hates golf, Woerner says. That makes my job easier, makes him look better and saves everybody a lot of time.

It's a two-way street, Gray adds.

At the end of the day, Gray says, serving as a product coordinator has been good for his career and his clients. After nine years as a broker, he has gathered about $50 million in assets and generated about $350,000 in production last year.

He concludes, The longer I've done this, the more I've grown to enjoy it and realize that it is helpful to our office. It helps us all do our jobs better.

Even if you never plan on becoming a mutual fund coordinator, don't be a stranger to the one in your office, says John Yagla, a rep and mutual fund coordinator with Dain Rauscher in Oakbrook Terrace, Ill. Coordinators open the door to wholesaler resources. Here's how:

1. Communicate. Let your coordinator know which mutual funds you're buying and the types of funds that interest you. This way, the coordinator can screen out the losers and set up appointments with companies that fit, Yagla says.

2. Ask the coordinator first. Most coordinators keep a stash of fund literature handy, so you can usually save yourself the call to fund companies for product information.

3. Inquire about available resources. If you tell the coordinator what you need, he or she can tell you if it's available from a wholesaler. They have money to spend, and they're looking for people to spend it on, Yagla says.

   Of course, you should be doing business with a fund company before you ask for support. It would be unprofessional to do otherwise, he says.

4. Scout ideas informally. Stop by your coordinator's desk every once in a while for a chat. We're definitely good people for resources about what's new, what's changing and which companies are offering special programs for brokers, Yagla says.

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