Once derided as ‘beer-drinking machines’, or ‘brochure delivery men’, since the GFC the role of the business development manager has changed: life has got tougher, but also more rewarding. Nicholas Way reports.
Michael Angwin, head of distribution for the research house van Eyk, knows better than most how the world has changed for business development managers (BDMs) post the global financial crisis (GFC). It’s a much tougher investment environment, but, at the same time, a more rewarding one; in volatile markets, good advice is like nuggets of gold.
“Between 2003 and 2007, rising markets made investing easy,” Angwin says.“Financial advisers (and their clients) could rely on beta in almost any asset class. Today, these planners have to generate alpha for their clients, often in asset classes where they don’t have much knowledge.
“In some regards, today’s investment climate is like 2001-02; they were difficult years for planners after the tech wreck and when retail property was going through the roof; but good planners with the right advice were able to establish their clients in good products for the boom that followed from 2003 to 2007.”
For Angwin, who joined van Eyk five years ago as a BDM, it means much more is required of people in this position post the GFC.
“It has gone far beyond selling product. In today’s market you have to know everything about the products you are selling, and how they sit in a financial planner’s strategic allocation.
“By this I just don’t mean their strategic allocation as it applies to your products; I mean how it applies to all the products across their various portfolios. This means you have to have an intimate knowledge of the planner’s business, and this requires time and effort to build this relationship.
“At van Eyk, this task is made easier by the fact our BDMs come armed with the intellectual capital that our research provides. It means we can give planners holistic advice that looks past today’s market noise and gives a three- to five-year macro picture of portfolio management. It’s much more than just being about the merits of an individual product.”
Gabriel Carey, a BDM at the boutique fund manager Instreet, concurs with Angwin’s view about the importance of understanding the financial planner’s business.“Product knowledge goes way past the product you are selling to understanding where it fits in with the broader investment strategy of an individual practice. Just as important is to know when it doesn’t fit the practice’s investment strategy and being prepared to say so, even at the cost of a sale.“ In Carey’s opinion, there are four ingredientsnto being a good BDM: a broad macro view of the economy; a solid understanding of the financial services industry; intimate knowledge of your products; and understanding your competitors’ products.
“Financial planners will quickly find you out if you don’t have the product knowledge, and they’ll quickly stop dealing with you if you can’t respond to their questions,” Carey says.
“ Today, planners are time-poor and don’t have time for BDMs who don’t have a sound knowledge of their products, how it would dovetail into the planner’s business, and the broader economy. Remember, too, that these financial planning practices are now under a significant compliance regime, and this limits the time they have for BDMs.”
From a financial planner’s perspective, when a BDM knocks on their door, what do they expect, apart from the obvious – another product coming across their desk? As Angwin and Carey rightly observe, they are time-poor and they don’t want to waste time listening to a BDM extolling the virtues of the latest product devised in the fund manager’s back room – unless there is a better story to accompany the product pitch.
Richard McLean, an adviser for the Melbourne-based practice Values Inspired Planning, has seen hundreds of BDMs come through his doors over the years. He says to get the best out of a BDM, it is important for the planner to state what his business is and at what stage of development it is.
“To get the most out of them, first tell them about your business, so they completely understand how you operate. Then they can voice their opinion on what you are doing and perhaps how it can be done better. They may be aware of things that we are not aware of, because they are out there in the market more than we are,” McLean says.
That approach resonates with Carey, who believes BDMs should capitalise on their market knowledge to advise individual clients.
