Distribution 2.0

How technology will redefine relationships
with asset management clients
Many asset management firms suffer from obsolete distribution functions: while
distribution headcount has increased 50% on average since 2012, distribution officers
are half as efficient as they were in terms of profitability across retail and institutional client
segments. Many distribution organizations have failed to keep up with:•
Powerful social and operating environment trends that have reshaped buyer needs•
Client demands for custom solutions, advice-driven relationships, and simplicity
Many asset managers think clients are more satisfied than they actually are: buyers scoreservice quality as much as 14% lower than most asset managers perceive, partiallybecause many investment firms have taken an incremental approach to upgrading
distribution functions, creating suboptimal outcomes.
To improve client experience, asset managers must place technology at the center of distribution
strategy: 34% of distribution leaders label technology investments as their number-one
priority.
Worldwide, asset managers spent an estimated $2.2 billion on distribution-related
technology in 2017, representing a median allocation of 6.5% of distribution costs.
•
Firms with more than $500 billion under management spent $50 million or more•
Firms between $250 billion and $500 billion in AUM spent $30 million or more•
Smaller firms spent between $5 million and $10 million, although some invested
significantly more•
The bottom third of spenders typically allocated $1 million or lessAbove-average investments in distribution technology tend to pay off for asset
management firms:•
Organic growth rates exceed 2% a year, while net flows plummet among weaker spenders•
Gross sales per salesperson rise as much as 28%•
Sales via reverse inquiry rise 36%
Successful firms will invest in three layers of distribution technology:•
Data, organized in an integrated repository that centralizes client data fromdisparate sources•
A client analytics engine that helps uncover client needs and preferences•
Client experience applications that deliver mass-customized services andreal-time information
Three enterprise-wide initiatives, all highly reliant on human capital, help upgrade
distribution organizations around new technologies:•
A new distribution talent model, more tech-savvy and better organizedagainst client needs•
An action-oriented mindset built on quick wins, rapid prototyping and agile processes•
A change management program with dedicated leadership that sequences investments

Table of Contents

Authorship

Introduction ................................................ 3

Primary co-authors:
Matthew J. Baker
matthbaker@deloitte.com

New buyer needs ...................................... 4
Deteriorating distribution economics .. 7
Distribution 2.0 technology..................... 9
Deploying Distribution 2.0 ................... 17

Harry H. Datwani
hdatwani@deloitte.com
Jeffrey A. Levi
jalevi@deloitte.com
Contributors:
Jonathan L. Doolan
jodoolan@deloitte.dePretty Khare
prekhare@deloitte.com
Michael G. McConville
mmcconville@deloitte.com
Benjamin F. Phillips
bfphillips@deloitte.com
Dan Worthen
dworthen@deloitte.com
Casey Quirk Principals andManaging Directors
Jeb B. Doggett
jdoggett@deloitte.com
Jonathan L. Doolan
jodoolan@deloitte.de
Yariv Itahyitah@deloitte.com
Jeffrey A. Levi
jalevi@deloitte.com
Benjamin F. Phillips
bfphillips@deloitte.com

Casey Quirk, a practice of Deloitte Consulting, is thelargest management consultant in the world focused
exclusively on strategy advice to asset and wealthmanagers. Our global team combines unparalleledindustry strategy and implementation experience,
proprietary research, and proven solutions frameworks todeliver value in a rapidly evolving environment. Our core
consulting assignments include broad business strategy
reviews, investment positioning and strategy, market
opportunity evaluations, organizational design, ownershipand incentive structuring, transaction due diligence, andpost-merger integration. In conjunction with Deloitte,
Casey Quirk offers the most comprehensive end-to-end
consulting solution in the industry.

Distribution 2.0

Kevin P. Quirk
kpquirk@deloitte.com
Jeffrey B. Stakel
jstakel@deloitte.com
Justin R. Whitejrwhite@deloitte.com
Casey Quirk Knowledge Center:
J. Tyler Cloherty
tcloherty@deloitte.com

www.deloitte.com/us/caseyquirk2Introduction
The rapid innovation and progress of technology, particularly in the last decade, has transformed
the distribution of goods and services fundamentally. In many industries, data, analytics and digitalapplications have removed intermediaries, compressed value chains, and reduced costs. Unlike
previous industrial revolutions, however, this wave of technological change also has permitted more
personalized interaction with individual consumers, as well as emphasized the experience, not justthe outcome, of a purchase—transforming transactions into relationships.
This white paper explores how technology will reshape distribution throughout the asset
management industry worldwide. Asset management has been slower than other financial services
industries to embrace new technologies. Its high profit margins have precluded the need toinnovate labor-intensive models; its focus on sales and growth has de-emphasized client service andretention; and its culture has reinforced the belief that strong investment performance would trump
all distribution inefficiencies, despite increasingly prevalent contrary data.
Winning asset managers of tomorrow, however, will embrace distribution technology—partly todeliver efficiency, but mostly to deliver a better client experience at scale, helping them acquire andretain more clients. Our white paper has four primary conclusions:•• Buyers in asset management have changed dramatically: powerful social and operating
environment trends are reshaping retail and institutional clients, who now seek more continuous,less transactional, relationships with investment firms.
•• Most asset management firms have failed to keep up, making only incremental
changes to address new buyer needs: although asset management firms have added an
estimated 50% to sales-oriented and marketing headcount for the five years ending 2017, theaverage efficiency of a sales professional, measured in terms of profitability, of each new hire has
plunged by more than half.
•• Providing the client experience that improves client acquisition and retention requires
technology. Asset management firms that place technology—measured by aboveaverage investments in data, analytics, and client experience applications—at the center of
distribution strategy can enjoy dramatic improvements in distribution efficiency acrossmultiple metrics.
•• But deploying the necessary technology only works in concert with enterprise-wide
initiatives designed to transform the entire distribution organization, including a new
distribution talent model, processes that support more rapid innovation and deployment, and achange management program that builds confidence and attracts clients.
Casey Quirk has an extensive research network driven by the Casey Quirk Knowledge Center’s primaryresearch on an ongoing basis with distribution leaders, global investors, and asset management firms.
Data cited in this paper and its exhibits, unless otherwise indicated, comes from a number of Casey Quirk
research initiatives, including our annual Distribution Benchmarking initiatives, conducted in concert with
Institutional Investor, a unit of Euromoney plc, across the United States and Europe; our retail intermediarysurvey work, conducted with the Money Management Institute in the United States; and our PerformanceIntelligence financial benchmarking survey of asset managers, jointly conducted across the United Statesand Europe with compensation consultants at McLagan, a unit of Aon.

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New buyer needs
Both retail and institutional buyers of asset management products and services worldwide have
evolved dramatically since the 2008-2009 global financial crisis.

Exhibit 1: Key Metrics Defining Change Among Asset Management Buyers, 201816

# of global consultant
consolidation transactions
2016-2018

75% Asset owners

looking for more service
customization

More
Demandingexperience as contributing
factor to manager
terminations

Share of U.S. active
management net new ﬂow 2018-2022,
from buyer groups outside legacy
retail and institutional channels1-40% Consolidation of

U.S advisor decision-makers
2015-2021

More
Complex
Buyer
Evolution

76% Stated client

>100%

More
Powerful

More
Diverse>28% Large asset

owners planning greater
allocations to alternative
investments in 201848%

Europeanhousehold wealthunderserved post-MiFID II

More TimeConstrained

69%

Buyers citingtime constraints aslimiting eﬀectivenessNotes: 1Includes ultra-high-net-worth/family office, outsourced CIO, large defined contribution plans, centralized investment
organizations within third party distributors, and subadvisory mandates.
Sources: Casey Quirk/McLagan Performance Intelligence, Casey Quirk Distribution Benchmarking, Casey Quirk Retail Intermediary
Study, Casey Quirk analysis

Clients of asset management firms are now:•• More complex. Retail and institutional buyers have become more focused on outcomesthan benchmarks, rewarding managers more for the cash flows they can create rather thanless certain asset appreciation. Portfolios have become more complicated to build and explain
as a result.
•• More powerful. The number of decision-makers reviewing and selecting asset managers for
portfolios is consolidating in both the institutional world—where investment consultants are
merging rapidly—and among individual investors, where decisions among financial advisors
increasingly lie in the hands of fewer, larger centralized gatekeepers.
•• More demanding. As the overall standard for digital delivery of products and services rises
across all industries—exemplified by real-time information, rapid delivery, seamless interactions,and customized fulfillment—asset management has fallen behind.

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4•• More time-constrained. Both asset owners and large intermediaries find themselves needing
to handle more internal functions with fewer staff, and they have less bandwidth available for not
only building portfolios and selecting asset managers, but also simply onboarding and monitoring
investment firms they have already chosen.
•• Finally, more diverse. While the industry continues to view clients as relatively faceless retailand institutional “channels,” most buyers view themselves as a segment of one that requires apersonalized approach. Increasingly, similarities among buyers stem more from their specificneeds and objectives as investors—implying that the industry relies on a client segmentation
framework that may not reflect true client preferences.
All of these changes in buyer needs have reshaped the engagement model that clients—again, retailand institutional—seek from their asset managers. The industry’s traditional engagement model has
been transactional and linear in nature:•• Interactions are driven by individuals, but built on standardized engagement models, without
much customization or flexibility•• Resources and processes overweight sales functions vis-a-vis client service or retention•• Discussions and interactions center on packaged products•• Post-transaction client communication tends to be reactive
Interviews with clients—asset owners, gatekeepers with large intermediaries, and even individual
investors—reveal that buyers want something different from asset managers. Clients view theirinteractions with asset managers as more of a journey: a continuous, accretive, and often
two-way relationship.

Exhibit 2: The Evolving Asset Management Client Experience

Past Experience

Desired Experience
Client seeks trusted
partners who cansolve broader
problems anddeliver advice

Prospect /Close

Onboard

Account
Management

Client identiﬁes
requirements andbuilds anunderstanding ofmanager capabilities

ExtendEnticeEngageEnter

Terminate

Client is onboarded
and seeks todeepen partnershipwith the manager

Client starts
discussion with the
manager and begins
to co-create solutions

Sources: Casey Quirk, Doblin

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Clients describe their optimal engagement with asset managers in many ways, but their feedback
tends to focus on four areas, which can be categorized as “four E’s”:•• Entice, where asset managers foster interest among clients by engaging them with tailoredcontent, messaging, advertisements, events and similar outreach. Prospective clients receive,
through multiple media, personalized content—often in the form of investment-oriented thought
leadership—that reflects their top-of-mind portfolio objectives and concerns.
•• Enter, a phase where buyers expect detailed discussions about their specific needs, and expect
asset managers to collaborate on potential, more customized, solutions. Clients seek high levelsof engagement from the asset manager’s specialists, who can help articulate the best way tomeet longer-term portfolio objectives using the recommended investment strategy.
•• Engage, a phase that begins with onboarding, where clients seek a streamlined and increasingly
automated process. Buyers expect ongoing service to remain personalized, usually throughtwo key functions: customized reporting that answers client-specific questions, ideally throughself-service portals; and enterprise value-added tools, such as risk management and portfolio
optimization applications.
•• Finally, extend, where technically proficient distribution professionals bring content andspecialists to review the client’s needs and suggest specific investment capabilities or services(e.g., asset allocation, hedging overlays, liability management, and income strategies) that could
further help clients meet their declared objectives. Absent from the depiction is the fifth “E”, exit,
which focuses on gathering information about client departures.
To date, the asset management industry has attempted to offer some engagement capabilities
within packaged products or relatively standardized offers often labelled “solutions.” But customers
say they want a more service-oriented experience. Consequently, the gap in expectations between
buyers and sellers in asset management has widened considerably. On average, clients rate
the service level as much as 14% lower than most asset managers perceive, with the greatest
expectation gaps in the Enter and Extend phases, where clients expect technical, personalizedinteractions that many asset managers apparently do not deliver.

Exhibit 3: Service Level Perceptions: Asset Managers versus Buyers, 2018

Perceived Quality Score

-14%

-11%
-2%

-8%

EnticeEnter

Asset Managers

ExtendEngageAsset Owners

Source: Casey Quirk Distribution Benchmarking

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6Deteriorating distribution economics
Most leaders of distribution organizations are aware of the growing expectations gap, but so
far many have addressed it by hiring more salespeople. Such strategies often fail to pay off. The
industry’s estimated sales and marketing-related headcount, as measured by full-time equivalents,
ballooned 50% between 2012 and 2017. Yet on average, dedicated sales professionals generated
slightly more than half as much revenue—and less than half as much profit—per employee between
2012 and 2017.

Exhibit 4: Asset Management Sales Economics, 2012-2017 (median change
indexed to 100)
Percent Change
150
140

Sales

130

FTEs
keting
r
a
M
&

48%

120
110
100

Compensation and Be
neﬁts/Sales

90

Reve
nue
on

80
70

Flow
s/Sa
le

s FTE
s
FTE
Con
tribu
tion
Mar
gin

60
50
40
2012

Gros
s

FTEs

2013

2014

2015

2016

-12%

-44%
-54%

2017

Source: Casey Quirk/McLagan Performance Intelligence, Casey Quirk analysis

Asset managers cannot provide customization and service-oriented capabilities using only
salespeople; delivering them effectively requires leveraging technology. Many asset managers argue
they have “digitized” distribution. But their improvements in most cases have been incremental, andfailed to address several symptoms of distribution inefficiency:

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Exhibit 5: Systemic Sources of Distribution Inefficiency, 2018
No single view of client acrossenterprise, poor data quality

Only 13% of asset managers reach their“target state” CRM

Limited ability to turn data into insights

Only 17% of asset managers successfullyenhance distribution through use of data
and analytics

Poor user experience and low adoption

Only 7% of asset managers report adding
value to their clients through distribution
transformation

Disconnected tools across sales, service
and marketing, resulting in disjointed
eﬀortsOnly 18% of asset managers reporthaving technology functions adequately
servicing distribution

Challenged execution: missed timelines
and budgets; misaligned management
teams

About 76% of distribution leaders label“sales productivity” a “top of mind issue”

Sources: Casey Quirk Distribution Benchmarking, Casey Quirk Analysis•• No single view of a client exists, in many cases, because of fragmented client data—collected
at varying levels of detail, under differing hygiene conditions, and housed in several places acrossan enterprise.
•• Inability to turn data into insights, as asset managers lack sufficient definition arounddesired analytics, the necessary data scientists with relevant skill sets, and quality orcomplete data sets.
•• Disconnected tools across sales, service and marketing, as different, siloed groups withinorganizations add applications without considering how to coordinate such tools together acrossthe length of the client journey.
•• Poor customer experience, a general complaint that can crystallize in many forms: inefficientonboarding with disjointed hand-offs among multiple participants, a lack of customized
approach, outdated client reporting, or a lack of service quality. Execution challenges
compound these problems.
These suboptimal outcomes likely all stem from a single root cause. Most asset managers haveviewed technology only as an extension of their existing distribution strategy. Consequently, distribution technology has received limited management attention, talent and budget. To be successful,asset managers need to place distribution technology at the very heart of their strategy. This will leadmost asset managers to rethink their distribution function altogether—with enough change to label
the new structure Distribution 2.0.

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8Distribution 2.0 technology
Asset managers still need functions around client and product, an organizational model that brings
together people and processes, and an engagement model that serves as a base framework forcommunicating with prospects and clients. But as buyers demand more personalized service
and more consistent communication with asset managers—a sum of interactions that often getsdescribed as client experience—legacy functions are insufficient. Distribution technology links
existing sales and service capabilities with client needs, using automation and processing capabilities
that allow firms to deliver client experience at scale across retail and institutional clients.

Exhibit 6: Distribution 2.0 Strategy Requirements
Client and ProductEngagement Model•• Prioritized clients and capabilities•• Content and thought leadership•• Sales and service model•• Strategic account planning•• Product development and management•• Asset/revenue goals•• Digital vs. analog touchpoints•• Use of specialists•• Brand marketing

Organizational Model•• Coverage model•• Resourcing approach•• Incentives•• Distribution processes

Distribution Technology•• Integrated data repository•• Client analytics engine•• Client experience applications

Client Experience•• Journey mapping•• Personalization of interactions

Source: Casey Quirk

Estimates based on Casey Quirk studies indicate that worldwide, asset managers spent around$2.2 billion on distribution-related data, analytics, and applications in 2017, with the median firm
allocating 6.5% of its budget to distribution technology. Asset managers that have invested heavily
in distribution-related technology already are seeing clear benefits. During the three years ending
2017, those asset managers who ranked in the top third of peers for spending on distribution
technology grew twice as fast as the industry overall in terms of net new flow, and eclipsed rivals inthe bottom third, most of whom shrank.
An asset manager’s size and distribution technology budget are only loosely correlated, with somesmaller firms ranking among the more aggressive spenders. In general, 2017 budgets ranged
from $5 million to $10 million among firms with less than $250 billion in assets, while businesses
managing more than $500 billion allocated as much as $50 million or more. Those firms ranking in
the bottom third usually spent less than $1 million, by comparison.

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Exhibit 7: Net New Flow as % of AUM by Estimated Distribution Technology
Spend, 2014-2017

4%

2.5%

2%

0.7%

0%
-2%
-4%
-6%
-6.8%

-8%

Bottom Third

Middle Third

Top Third

Data, Analytics & Distribution Technology Spend

Notes: Includes all IT or technology expenses (personnel, systems and vendor) relating to sales, marketing or distribution.
Examples include CRM systems and software, investor data, investor data management, content creation and curation, social
media creation and distribution, and platform spend for client-facing technologies. Excludes firms with AUM < $75 billion.
Sources: Casey Quirk/McLagan Performance Intelligence, Casey Quirk Distribution Benchmarking, Casey Quirk analysis

Additionally, asset managers that report leveraging data and analytics as a primary input to theirdistribution efforts benefit from significantly longer institutional client tenure than those that do not.

Exhibit 8: Institutional Client Tenure by Technology Usage, 2018

Primary or
Secondary Input

10 Years-30%

Limited / No Input

7 Years

Note: reflects self-reported use of data and analytics in distribution.
Source: Casey Quirk Distribution Benchmarking

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Most distribution leaders realize they need to invest further in technology to support a wider
number of more customized and complicated relationships with buyers and intermediaries.
Nearly two-thirds of distribution leaders labeled technology or new talent—usually referring
to professionals more comfortable with using technology in distribution—as a number-one
management priority for the next three to five years.

Exhibit 9: Most Significant Changes Identified by Distribution Leaders, 2018

11%

Invest in technology

34%
18%

New skill sets

30%
27%

Change coverage model

18%
6%
7%

No signiﬁcant changes

Other

Overhaul structure

2%
7%
36%
4%

Past 3-5 Years

Next 3-5 Years

Source: Casey Quirk Distribution Benchmarking

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11Distribution technology can mean many things, but effectively deployed, it usually consists of three
critical layers:•• Client data, best held in an integrated data repository that unifies client, prospect, andcompetitive information from proprietary and third-party sources.
•• A client analytics engine: algorithms that process large sets of data in order to generate
insights regarding client and prospect behavior. Outputs from the analytics engine allow
distribution professionals to segment, analyze and mine client data, finding new prospects andexpanding existing relationships.
•• Finally, client experience applications that allow distribution professionals to use analytics to
improve customer experience across multiple functions. Examples include personalizing web andemail interactions; coordinating the action of marketing, sales, and service teams; streamlining
or automating due diligence questionnaires, requests for proposal, and onboarding; delivering
insight through reports; and collecting client interactions and feedback.

Exhibit 10: The Three Layers of Distribution 2.0 Technology
Distribution Technology Layers
1

Impact+47%

Increase in deﬁned
beneﬁt plan client
tenureAlgorithms that ﬁnd actionable patterns
in client and prospect behavior+28%

Increase in grosssales productivity
growth per
salesperson

Applications that leverage analytical
output to customize engagement withclients+36%

Increase insales via reverse
inquiry

Integrated Data
Repository

Database technology that uniﬁes client,prospect and competitive informationfrom various sources

Client Analytics
EngineClient Experience
Applications

2

3

Sources: Casey Quirk Distribution Benchmarking, Casey Quirk/McLagan Performance Intelligence, Casey Quirk analysis

Few firms have built any of the three layers completely, let alone finished all three seamlessly.
According to recent metrics from the Casey Quirk Distribution Benchmarking survey:•• Virtually no asset managers have achieved their target state in terms of an integrated
data repository•• Less than 10% of firms have achieved target state in leveraging technology capabilities in areas likeclient relationship management (CRM) and client reporting•• Only 18% of asset managers believe their technology organization has the full set of skills needed
to support their distribution technology needs.
While specific applications and technologies vary from firm to firm, each layer of distribution
technology has characteristics common to most asset managers building them.
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121. Integrated data repository
An integrated data repository is the data architecture that centralizes data about clients,
competitors, and the operating environment to create a single source of information for the entire
enterprise. Most asset managers suffer from fragmented data about buyers, resulting in inefficientprospecting (i.e., spending time on buyers that likely will not value the asset manager’s strategies
and services) and poor-quality interactions with current clients—primarily because different service
officers have different information, leading to inconsistent and sometimes duplicative coverage of aclient. This fragmented view means asset managers rarely see how unorganized they look to a buyer;
conversely, the disorganization is all the client sees.
Asset managers usually need to work with multiple sets of distribution data, all of which they struggle
to organize and reconcile:•• Data from the client, including account information, transaction history, performance andrisk tolerance•• Sales and marketing history data, including calling activity, past RFPs, marketing andconference data, and feedback from past and present clients•• Third-party data, such as data packs from intermediaries and data feeds from custodians•• Industry business intelligence databases containing data from not only asset owners andintermediaries but also other asset managers, usually focused on descriptive client information,
performance, assets and flows

Exhibit 11: Distribution 2.0 Technology Layer 1: The Integrated Data Repository
Internal Data

External Data

Sales & Marketing

Industry Databases•• Sale activity and notes•• Flows, assets, and fees•• RFPs•• Benchmark data•• Marketing andconferences•• Voice of the client•• Peer group performance

Integrated•• Competitor data

Data Repository
Client Data•• Account information•• Transaction data•• Historical performance•• Risk tolerance

Third-Party Data
Centralizes data fromdisparate sources to act as a“single source of truth”•• Wealth clients•• Platforms•• Transfer agent•• Custodian

Sources: Casey Quirk

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13

The integrated data repository often is a series of highly interlinked database management systems,
not spreadsheets. Well-built repositories share some characteristics:•• They are extensive, including flow, asset, performance, touchpoint, and demographic data,
connected by consistent and robust reference data and metadata.
•• They are flexible, built on scalable server infrastructure with flexible connectivity to multiple
applications and user groups.
•• They are well-governed, with clear data stewardship and data strategy ownership.

2. Client analytics engine
While an integrated data repository provides a single source of truth, a client analytics engine links
the applications and technology that allow distribution organizations to harness the centralized data
effectively. The client analytics engine requires data scientists to develop algorithms and data mining
applications that comb data for patterns and markers that match marketing, sales and relationshipmanagement objectives. Output from analytics engines support a variety of analyses, roughly
grouped into at least four categories:•• Descriptive: profiling clients and activity within client segments based on business intelligence,
internal reporting, and statistics.
•• Predictive: identifying client attributes that represent high-probability prospecting targets,and then isolating the best next potential buyers to pursue – and capabilities to offer.
Microsegmentation—using data mining to more narrowly identify high-probability prospects,
usually through characteristics of buying behavior—is an increasingly common analytics set.
•• Cognitive: leveraging machine learning (a form of artificial intelligence) to transform extensive,
unstructured data into meaningful, human-like insights upon which a distribution professional
can act.
•• Prescriptive: suggesting a course of action to increase the likelihood of a given outcome, e.g.,
identifying trigger actions that convince a client to take a meeting or purchase a fund.

Exhibit 12: Distribution 2.0 Technology Layer 2: Client Analytics Engine

MarketingSales

Realtime exchange of information

ClientAnalytics
EngineService
Realtime exchange of information

Descriptive

Predictive

Cognitive

Prescriptive• Business intelligence• Reporting• Statistical analysis• Time series regression• Data mining• Machine learning• Natural language
processing• Simulation• Decision support

Integrated Data Repository
Sources: Casey Quirk

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143. Client experience applications
The final layer of distribution technology consists of applications that leverage analytics to support
more customized interactions with buyers, using real-time information to better coordinate
marketing, sales, and service personnel. These applications vary the most from firm to firm:
while they may share similar third-party base applications, their deployment, data visualization
and use cases (i.e., the specific outputs they provide) should reflect an asset manager’s specificcomparative advantages.

Exhibit 13: Distribution 2.0 Technology Layer 3: Client Experience Applications
EﬃciencyDiﬀerentiation

Targeted/
Personalized
Thought Leadership

Tailored Client andManagement
Reporting

Behavior-Based
Client MicroSegmentation

Portfolio
Construction
Advice Tools

Tailored content
delivery across email,mobile or client
portalFlexible, interactive
client reporting
toolkitNeeds-based
segmentation, andengagement
approachPortfolio optimizer
that suggests
changes to client
holdings

Marketing• Marketing automation• Content management• Targeted web content• RFP databases

Sales
• CRM
• IP-driven sales tools• Mobile sales collateral• Digitized relationship knowledge• Real-time sales notes• Digital onboarding

Predictive Client
Interactions
Next-best product tosellService• CRM• Reporting engine• Self-service account management• Portfolio analyzers

Client Analytics Engine

Integrated Data Repository

Source: Casey Quirk

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Asset managers benefit in two ways from client experience applications:•• Efficiency: Many client experience applications can automate and streamline standard functions
within distribution processes, removing errors, reducing headcount, and increasing flexibility.
They can also direct effort away from clients and prospects where it is likely to be unproductive.
Applications that assist with onboarding, reporting and content management generally fall into
this category.
•• Competitive differentiation: Client experience applications that help deliver investmentoriented content—arguably a core competitive advantage for an asset manager—can play a keyrole in differentiating an investment firm and helping it deliver more customized support to a
relationship. Portfolio construction tools are a primary example.
Client experience applications span multiple distribution functions:•• Marketing: Client experience applications leverage insights to generate and nurture clientinterest. They include ad retargeting, content management, email marketing automation, andwebsite optimization tools that better align thought leadership to buyer needs, particularly asclients further engage with various forms of content. This reduces the cost of client acquisition.
•• Sales: Client experience applications help salespeople efficiently manage their sales process,capitalize on insight into client interests, and better support the technical, advice-heavyinteractions that outcome-oriented buyers prefer. They include tools to automate the generationof RFP or DDQ responses, portfolio analytics tools to support “advice-oriented” interactions, andautomation for elements of the onboarding process.
•• Service: Client experience applications can augment relationships with existing clients, providing
real-time account information and interactive digital client service tools, multiple channels
including self-service portals. They also can take the form of investment-led value-added tools—
providing risk management analysis or portfolio optimization, for example—that showcase awider range of the asset manager’s intellectual property.
Importantly, a customer relationship management (CRM) platform can provide the necessary
relationship management tools to track, manage, and support interactions across marketing, sales
and service. This requires firms to view CRM as more than a contact tracking system. Instead, welldesigned CRM systems can pull together analytics and applications, proactively creating a common
view of prospects and clients, as well as supporting an integrated set of client interactions acrossthe enterprise.

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16Deploying Distribution 2.0
Distribution technology, therefore, is best viewed not as a singular proprietary system, but rather as
a combination of component technologies, third-party and in-house, brought together within a clear
blueprint and ideally connected into the three technology layers described earlier. A sample client
journey shows how the technologies can work together to better support the entire lifecycle of a
relationship with a buyer.

Exhibit 14: Distribution 2.0 Sample Client Journey

Client Journey

EnticeEnter

EngageExtendIntegrated Data
Repository

Client Analytics
EngineClient Experience
Applications•• Interconnectivity acrossmarketing-related
technology, CRM, andinternal finance data•• Website browsing
activity•• Links to third-party data
sources•• Deep understanding ofclient needs•• Digital lead generation•• Strategic content
calendar•• Automated personalized
email•• Tailored web content•• Targeted thought
leadership delivery•• Asset allocation tools•• CRM notes•• Sales officer activity
metrics•• Client portfolio
information•• Competitor information•• Analytics to support
DDQ / RFP / Pitchbook
automation•• Predictive model fornext best interaction•• Situation sales guidance•• Consultative sales
supported by tablet tools•• Portfolio optimization tools•• Practice management
value-added engagement•• Client service
interactions•• Client performance•• Account activity•• Portal usage•• Defined frameworks
for data capture on
client preferences,
desired service levels,interactions, andreporting•• Dynamic document
management•• Automated digital
onboarding•• Modular, interactive
client reporting•• Tailored market
commentary•• Seamless, insight-richclient portal•• Capture of service-level
expectations and unmetclient needs•• Client satisfaction
metrics•• Predictive modelingto articulate potential
responses to unmetclient needs•• Introductions to
attractive products•• Tailored offers around data,technology, risk, practicemanagement, etc.
•• Personalized content
anticipating future issues•• Training opportunities•• Portfolio construction tools

Source: Casey Quirk, Doblin

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17Newer distribution technology likely will erode the asset management industry’s current lines
between intermediary clients and institutional buyers. Distribution 2.0 technology blends the hightouch content effective in institutional relationship management with the mass customizationdelivery mechanisms of the intermediary world, permitting asset managers to deliver morecustomized and service-oriented client experience at scale to buyers regardless of their size.
There is no technology to organize distribution technology: that requires support from humancapital across the enterprise. In fact, the technology will not work without capable distribution talent,
which the various applications and systems leverage, not replace. Implementing a technology-centric
distribution model effectively depends on three enterprise-wide initiatives, involving officers acrossmultiple functions:•• A new talent model for the distribution organization•• An action-oriented approach to execution that focuses on rapid prototyping and moreiterative processes that test, learn and refine•• A change management program with a dedicated leader, designed around sequential
implementation and quick wins

1. New talent model
Legacy distribution organizations within asset managers share many characteristics that no longer
resonate with buyer demands: they lack the data to segment clients at anything more detailed
than the blunt level of channels, they silo sales and service functions in many cases, and they“outsource” technology discussions to the CTO or contractors, deeming them less strategic
for success.
Supporting technology-led distribution, however, involves organizing around buyers, not channels,
in a way that better supports specific client journeys. Consequently, asset managers can reorient
their talent acquisition and retention strategies as follows:•• Reorganizing talent: An increasing focus on client journeys will lead asset managers to create
tighter cross-functional teams in distribution organizations, removing some of the current walls
between sales, service, marketing, and support professionals. Additionally, firms will organize
those teams according to specific client needs, rather than by legacy channels. Asset managers
already have explored building teams created around the common needs of large institutional
clients and large gatekeepers, which now are more alike than large and small institutional clientsare to each other. Incentives will need to adjust accordingly as well.
•• Changing talent profiles for existing roles: Distribution officers in both sales and service
need to be focused on client needs, rather than simply on product characteristics. This involves
recruiting more tech-savvy individuals comfortable with leveraging digital tools, but it also involves
finding distribution professionals able to articulate an investment capability’s advantages in a
specific client context, by leading an portfolio-oriented conversation with sophisticated buyers.
New talent also should feel comfortable forging strategic alliances with existing distributors andnew entrants to create new, advantaged distribution opportunities.
•• Defining new roles: Asset managers will need different talent to help link outputs from
distribution-oriented technology to the human leaders of professional buyers. Distribution
organizations will need to recruit data scientists, digital marketers who can build and broadcast
consumer brands, and distribution professionals more adept at blending elements of sales andservice. Distribution COOs are becoming more commonplace among asset managers.
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18

Exhibit 15: New Talent Model for Distribution 2.0

Organizational
ChangesTalent Profile
ChangesOrganized for success•• Structures, processes, and incentives to encourage collaboration•• Efforts aligned against client needs, not legacy channel-based
approaches

Distribution team focused on client needs•• Portfolio-oriented sales and client service•• Increased specialization and technical expertise•• “Tech-savvy” individuals able to leverage tools and foster tech-driven
discussions in the field

Need for technology expertise and support

New Roles
Required•• Digital marketers with an emphasis on brand and direct-to-consumer
advertising, potentially with experience in other industries•• Hybrid internal/external sales, sales/marketing, and sales/service
professionals•• Data scientists capable of providing real-time analytics and digital tools

Source: Casey Quirk

2. Action-oriented execution
Asset management’s manufacturing-oriented model is ill-suited for rapid change, as it views
innovation as only a product-level function; changes to the delivery model are viewed as wholesale
shifts that are expensive, unwieldy and high-risk. Consequently, most distribution leaders have beenreluctant to install the three layers of technology required in a new client environment, perhaps
fearing that such projects are too big to succeed—at least on their watch.
Some distribution organizations that have started to transform themselves have done so by
taking cues from the playbooks of other industries. They embrace the complexity of distribution
transformation, but also appreciate the necessity of such changes. Consequently, to break down
what is an often overwhelming transition, iterative execution processes—which embrace rapid
prototyping and market testing in real time with pilot clients, rather than attempting to solve
all issues perfectly at once—will be a necessary method that asset managers use to get theirorganizations and clients comfortable with new technology in a sequential, more affordable, way.

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19

Exhibit 16: Action-Oriented Execution Processes for Distribution 2.0•• Clear vision and accelerated learning•• Target capabilities and prototypes

Frame &
Design

Reﬁne

MVPs

•• Understand feedback,challenges, and bottlenecks
Learn•• Dynamic collaboration
between leadership networks

Test•• Develop test groups•• Seek client and market
feedback•• Flexible adoption of newprocesses and capabilities

Provide Feedback
Source: Casey Quirk

Creating minimal viable products (MVPs)—smaller changes, in terms of applications or processes—
allows asset managers to gather “quick wins” that have several advantages: they can test and refinethem in real time, they can fit into smaller budgets, and they can convince more skeptical distribution
professionals that technology can be a highly useful tool in a day-to-day situation.

3. Change management program
The iterative process may encourage innovation, but it cannot function in a purely decentralized way.
Most asset managers have failed to implement broad changes regarding distribution technology,
perhaps because executives view such restructuring as a side project of an existing manager, rather
than the responsibility of a dedicated leader. Asset managers seeking to transform their distribution
organizations must assign the task to an enterprise-level executive, familiar with not only distribution
and technology, but also with the products and services that may adjust as a result. Additionally,
experienced project managers, potentially residing within a transformation office, will be necessary.

Exhibit 17: Change Management Leadership for Distribution 2.0
Less Impactful

Decentralized
Approach
Functional experts
provide guidance andsupport to respective
teams
Source: Casey Quirk

Distribution 2.0

Leadership Accountability

Innovation Team
Cross-functional teams
focused on incremental
enhancements

CX Leader
Dedicated leader withauthority to develop andaugment client
engagement andexperience

More ImpactfulDistribution
Transformation
LeaderSingle enterprise-level
executive, driving thetransformation of bothproducts and services

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20

The distribution transformation leader should have several key priorities:•• Setting the vision for distribution strategy across all elements, including technology andhuman capital•• Driving the integrated approach, including development of MVPs, as wellas other initiatives•• Acting as champion for distribution transformation across internal constituencies•• Defining and measuring key success metrics, and tracking progress•• Ensuring implementation consistency across functional areas and geographies.
Some of this leader’s first decisions will focus on deciding where to start. Implementing a Distribution
2.0 transformation all at once likely involves more budget and bandwidth than many asset
management firms can afford. Transformation programs designed around “quick wins” tend to havethe best chance of success. To date, asset managers successfully implementing new distribution
technologies do so by focusing initial efforts on a core client set: usually one with specialized needs
and representing a sizable portion of economics to the enterprise. Buyers falling into this category
often include insurers, endowments and foundations, defined benefit plans in liability-managementmode, large family offices and large gatekeepers for intermediary distribution.

Exhibit 18: Distribution 2.0 Implementation Approach

Distribution 2.0 Strategy and Implementation Approach
Identify Priority
Client Group &Deﬁne Future CX• Deﬁne priority client archetype(s) and key pain points• Outline future client experience for targeted client group• Identify gaps between current and future experience

Develop Client
Experience MVP• Deﬁne client experience Minimum Viable Product (“MVP”)• Develop roadmap with deﬁned near-term deliverables

DESIGN

Rapidly Create
Prototypes

TEST• Quickly develop prototypes to build and test concepts in market• Create interim data sets with critical data points to test eﬀorts

Determine Required
Capabilities• Assess shared data repository, analytics engine, and client
experience applications• Append roadmap with initiatives to close gaps and scale
prototypes

Reﬁne Prototypes andScale Eﬀort• Evolve and scale experience prototypes to full solutions• Integrate experiences into Distribution 2.0 technology ecosystem

Create Integrated
Ecosystem• Continue to implement and integrate Distribution 2.0 technology
layers: evolving data repository completeness, client analytics
engine functionality and client experience applications

Expand toadditional client
segments andexperiences

SCALE

Source: Casey Quirk

Distribution 2.0

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21This client-specific approach has several advantages. Narrowing the scope reduces execution
risk and shortens implementation time. Building around MVPs permits real-world testing acrossa smaller, more loyal client base, safety-testing new ideas. Most importantly, successful smallerchanges build confidence across the enterprise that new ideas in Distribution 2.0 can improve clientacquisition and retention, raising appetite for broader transformation across the enterprise.
“Transformation” has become an overused word, but it truly describes what needs to take place
among distribution organizations across the asset management industry. To succeed in a morecompetitive future operating environment, asset managers must understand and serve their clients
continuing to meet rising expectations for levels of personalized service. Human capital will nolonger be able to meet these demands without leveraging technology and a process to continuously
innovate that technology. As a result, asset managers and other advice businesses—facing similar
challenges—will look increasingly similar over time.

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22

Distribution 2.0

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