The changing face of the BDM

The role of the business development manager (BDM) is one that has seen significant change over the past five years. BDMs were once regarded as those shiny, happy people at the bar with the boss’s credit card, but now advisers are looking to BDMs to add real and tangible value to their business.

Business Health director Rod Bertino says the role of BDM has been evolving to reflect the needs of the day, and in the highly regulated financial services environment, many BDM roles have been extended to include practice management responsibilities.

“The change in the role of BDMs is mirroring the change in the adviser’s world in the face of the new regulatory environment,” Bertino says.

As such, many fund managers and dealer groups are now investing heavily in skilling and equipping BDMs to fill this new model.

For many advisers, the time is also ripe to consider retirement and the sale of their practice. Bertino says with this in mind, what many advisers really want is value added to their business.

Rather than just getting the product spiel from BDMs, Bertino says, advisers want help.

“Advisers are sick of hearing about products — they understand products. Instead, they want to talk about business planning and business structures — they want business advice and business coaching.”

Bertino says what advisers want is a BDM who will set and follow through on plans and strategies, and show that they really care about the adviser’s business.

Parkside Investorplus director Wayne Billington says what really adds value to his business is “practice management solutions and ideas, not product promotion”.

Billington’s practice has a restricted product range, with the underlying fund manager selection outsourced to a research house. So he wants to hear a little less about single products, and more about the technical aspects of products.

Billington also looks for practice management support — particularly for directors and managers — and assistance with strategic planning, annual business planning, marketing, and client relationship management.

For Newell Palmer Securities director and representative Vernon Rego, however, the most important thing for a BDM to do is be a reliable point of contact for answers to any questions, or to rectify a query.

“We have a group of eight advisers, so we do our own business planning, but we like a BDM to be there when we need them to help. The BDM really needs to be able to co-ordinate the relationship between us and the investment manager,” Rego says.

But at the end of the day, BDMs are still, by and large, employed by fund managers with the aim of selling product. So what can a BDM expect in return?

Business Heath managing director Terry Bell says the relationship between adviser and BDM should be structured, with goals and measures. Bell says if a BDM does add value to an adviser’s business, and the fund manager’s products are up to scratch, then a BDM does earn the right to expect the products to be picked up.

He also believes in the future, BDMs need to be rewarded more for adding value to an adviser’s business than for selling product.

FSP chief executive Geoff Rimmer, however, says it is important to define the difference between the two types of BDMs — those employed by a dealership, and those aligned with a product supplier.

“The role of the dealership BDM is to work with the adviser in facilitating business outcomes — practice development, practice management, and systemising the business,” Rimmer says.

“If you are a BDM working for a product supplier, on the other hand, your job is to create volume for the business you work for.”

Rimmer says in this role, BDMs have got to walk the fine line between helping an adviser to support and market his business, while convincing the adviser that including particular products from his or her supplier will give the best outcome for both the adviser and clients.

Rimmer says to expect product supplier BDMs to do what the dealer should be doing is flawed.

“Over the past few years it’s been too easy to say a BDM will do your business planning for you. The only way an adviser can repay a BDM for their support in preparing a business plan is to go with their products. And if you are paid by a fund manager, the business plan always has to make an outcome that helps the product provider.”

Rimmer believes the role of practice development should be handed back to the BDM employed by the licensee or dealer, and that product supplier BDMs should focus more on finding the most effective way to use the product range to benefit the client.

“There always needs to be more education in terms of product and concepts that lead to better client outcomes and strategies that add dollar value for the adviser,” Rimmer says.

But understanding client outcomes is an area BDMs may need to work on, with a survey of around 200 advisers conducted by Business Health last year finding that when valuing the performance of BDMs, understanding client needs came in at the bottom of the list (see table).