Does anyone know how does sales credits work in AM fund sales? Particularly interested in the Institutional, Intermediary or Wholesaling businesses.
Any color on the % on commissions too?
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You will be assigned a territory (wholesale) or accounts (Institutional). Can't really speak about institutional comp as I've been on the wholesale side for a long time (not in funds but know many who are). Wholesale is broken down into external (sales VP) and internal (analyst / associate). The goal of both is to maintain and grow existing relationships, develop new relationships, and add total net flow (investment - redemption = net). How you get compensated varies by fund family but essentially you are paid by a combination of new money in and maintained aum (formulaic - again varies by fund family). An external may have a territory quota of $500M and may receive 10bps (500k) compensation and a small salary / bonus. It used to be very common for good wholesalers to crack 7 figures. Can still do it but much harder today with fee compression. Still, a good wholesaler will make north of 500k.
Internals typically provide multiple roles; supporting all the functions of the external (following up on meetings, running proposals for externals gang, setting appointments) and doing all the things the external does with smaller producers (not worth the externals time but still generate aum). This is the entry point for sales distribution at a fund. It's a good gig. Target comp is 75k-150k and you stay there until you move to external or lateral to another client facing role (institutional, Product Strategy).
Most on WSO will hear sales and say "no thanks". However, it's not sales in as much as it is relationship mgmt and account development. There's a huge difference. I do both and have for 30+ yrs. Sales is actually getting checks (retail) and is great. Wholesale is building relationships with retail to help them get more checks.
It's a really good role (specifically at fund families) for those who want to learn a ton about macro econ, the markets, how they relate (KPIs) AND discuss those issues while weaving in fund offerings with the FAs. The good ones are able to be consultative, not making it about fund A or B, but rather learning about FA's practice and discovering how they can help the FA grow.
My little knowledge of Institutional fund sales comp is that it is far less "bumpy" (commission / aum based) and more salary + bonus because there is a much longer sales cycle. It could take a few yrs to get Calpers to move a couple hundred million from manager A to B (more like corporate sales - which I've done as well).
Thanks for taking the time to write that. Excellent advice here.
What type of firm did you wholesale for?
I am a hybrid. Independent wholesaler in the annuity / insurance space while also running a branch for a broker dealer. Also have my own retail client base. We work with wholesalers all the time (funds, VA, alts) and then I wholesale the insurance based products (fixed annuities, LTC, Life insurance) to both my broker dealer reps and FAs / insurance planners outside my OSJ Branch across many platforms. At one point I had several hundred FAs / insurance based planners writing their business through our shop. Have a more narrow but deeper focus today as it's hard (and expensive) to do that as an independent. I essentially had to create my own sales desk, case mgmt team, etc where you have that all done for you when working for a company. Of course much bigger spreads as an independent and I know many who have made / make millions doing that. They became national brokerage distribution companies. I wouldn't mind owning one but didn't want to build one when it was all said and done.
What are your thoughts on the future of retail wholesaling? It seems like it’s getting harder with many platforms trying to downside the number of managers they work with.
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