Asset managers seeking to be first-to-market with an investment strategy or product wrapper should develop a distribution plan as they develop the product itself. Understanding the current marketplace, onboarding requirements and platform fee economics is critical to the long-term success of your product. Due to the complex nature of distribution relationships and the many considerations that go into a successful product launch, we often consult with asset managers well ahead of any SEC filings, the drafting of a prospectus or any compliance reviews.

This upfront process allows managers to gain valuable insights from their potential distribution services partner and, when the time comes, to move faster and with greater assurance. Unfortunately, we have heard far too many times of asset managers going to market without the proper share class or fee structure to support their distribution efforts. These types of roadblocks or delays can be reduced by collaboration with an effective distribution partner in the early stages of product development.

To maximize the benefits of a consultative partnership, here are a few questions managers can ask a potential distribution services provider.

1. Do your consultative services extend to platform introductions?

Intermediaries are generally wary about newer strategies—particularly those that embrace newer asset types, such as digital assets. You will want to understand up front whether there’s a chance for onboarding with your product and what the requirements and economics are. Does the distribution services provider have specific share class requirements? What types of setup and ongoing fees are required? Having the opportunity to connect with the relevant gatekeepers at the platforms prior to your product launch will help to create a stronger relationship with the distribution partner and a greater understanding of how your strategy will be made available to their advisors. Find out, too, whether introductions are part of a bundled distribution offering or charged as an “extra” consulting fee.


2. What is the responsiveness of the team handling distribution services and what technology and workflow system do you use to communicate with clients?

It’s not possible to be “consultative” if your methods of interaction are dictated by rules and requirements that don’t allow for client education and collaboration. It can be even worse if your methods are hampered by awkward systems or slow response and turnaround times. Ask yourself, will the distribution partner be working from a solid understanding of the product, including what problem it’s intended to solve, as it works to help deliver your message within the regulatory landscape? Ask about daily interactions, standard turn-around times and issue escalation processes. Asking for references from recently onboarded clients can show how effective (or ineffective) they have been in executing a solid communication plan and customer service model.

3. How much more is that going to cost me?

Theoretically, outstanding people can provide outstanding consultative services in practice, we hear about frustrations when managers seek out advice—which takes time to prepare and give—from firms that face heavy pressures to generate revenues and increase fees. These nickels and dimes add up and can impact your bottom line. Don’t just ask about the expertise of the team. Ask about whether, or how much more, you may be charged to receive it.

These questions are relevant even if you aren’t trying to be the first mover with a particular product type. But if you are trying to get something new off the ground, these questions may be vital in selecting your distribution services partner because in a regulated marketplace, there’s no value in being fast if you don’t have an effective and compliant distribution strategy.

Learn more about and how we can support your firm’s registered and alternative investment fund distribution needs, or contact us to be connected with a fund services team member.


Distribution services provided by UMB Distribution Services, LLC.