“We’re in the market every day talking to different advisers, and that gives you the opportunity to get to understand the best elements of those businesses,” he says.
“Then, when you are talking with a specific client facing a specific issue, you can draw on this bank of knowledge to help solve this client’s issue.
“It’s all about having a genuine interest in the adviser’s business, having a thorough understanding of their operations and what business goals they have set themselves. Then you will appreciate what sort of issues they are facing and hopefully draw from a kitbag of solutions you’ve developed and present some of them to assist them.”
How an astute BDM can help a financial planning firm is graphically illustrated by McLean. He cites the example of a BDM from Macquarie Bank who was in tune with his business challenges and was able to form a lasting impression because he understood the business.
“It was the guy who looked after our CMT. He saw what we were trying to do with self-managed superannuation funds (SMSFs). He said, ‘you guys need to get on a plane and go to Sydney and talk to Richard Barber from Class’, a software provider that would help us with our back office regarding SMSFs. It was one of the best decisions we ever made, and it was because he understood our business. He could tell that we weren’t buying into whatever product he was talking about, and it took a while for that to come out, but in the end he realised we were more preoccupied with the challenges facing our business.”
‘A good BDM has to approach advisers not with just product, but with expertise’
McLean says a good BDM has to approach advisers and planners not with just product, but with expertise as well.
“If they can come and ask me what my biggest challenges in my business are right now and say, ‘hey, do you mind if I come back to you on those’, and go away and do some brainstorming on it, I’d be more interested to listen to them about their products,” he says.
“Good BDMs should be able to help with problem solving, just like the guy from Macquarie.
“In this way, they form bridges where they can help the business go to a new level by providing ideas and thoughts they have learnt from their industry experience. They may be aware of other strategies and markets that are very successful and perhaps pass that on to you. I don’t think they go about telling you what other advisers are doing, but they can give you a heads-up on what’s successful out there.”
Gaining the trust of the planner or adviser is the key to a successful relationship for a BDM, as McLean attests: “BDMs should be open to the way an individual business is run and respond thoughtfully to that,” he says.
“Completely understanding our business is important. Most BDMs find it hard to get to that stage where they can win the adviser’s confidence to the point where they open up and share how their business is going with them. If they can reach this stage, then it’s possible both parties can add value to the relationship.”
McLean says it takes a special individual to gain that confidence from advisers and wonders why more isn’t done by fund managers to provide BDMs with the requisite “tools” for the job.
“If they are just bringing in brochures, we don’t want to know about it. But if they can see how they can solve a problem, or provide a solution to a challenge we’ve got, that’s what we want to hear about. We don’t want to hear a product flog. We know they are there to sell product – they get pushed by their bosses to produce results – but if they’ve done their homework as a company they should be coming up with products that are attractive anyway.
“To resonate with us, the fund managers should provide the products best tailored for the type of approach we take as financial planners. They have to offer products that are appropriate for our clients.”
For van Eyk’s Angwin, in today’s markets those products need to be “active, not passive”.
“As a firm we’re a strong believer in active management; we argue that investors will have to take active positions to achieve outperformance, as it is quite possible markets will be going side-ways for some time. Even if they rise, it will come with a lot of volatility,” he says.
“By definition that’s a hard sell right now. Financial planners and, to an even greater extent, their clients, are gun shy. There’s no better evidence of this than the big demand for cash products. So it’s imperative you are a good communicator, that you could sell the positives of an active strategy. As we tell planners, with risk comes opportunity; but your arguments have to be rigorous.”
Van Eyk’s experience to date is that many planners are interested in hearing solid arguments for active management; their difficulty is convincing their clients.
Angwin says: “If we can help do this then we are playing a positive role in helping their business, as well as their clients. For me this means taking every opportunity to speak to planners’ clients; in my experience planners and their clients appreciate this. I suspect I have given more public talks on investment in the past two years than I did in the previous five.”
