The evolving adviser-BDM relationship

As financial advisers seek out practice management support, business development managers (BDMs) are increasingly providing invaluable guidance to help advice practices grow.

While the role of a BDM in the fund management space has typically focused on driving revenue growth and lead generation, industry experts have highlighted how these professionals are now adding further value to advice practices.

Earlier this year, Business Health recognised BDMs are providing technical advice and guidance to advice practices followed by sales and marketing assistance. For top-tier firms, they are also offering business and strategic planning, recruitment help and training and professional development.

Jaimie Ramsey, founder and principal consultant at Advice Business Consulting, has observed the changing relationship between BDMs and advisers during her 22-year financial services career.

“Once upon a time, the BDM role was jokingly referred to in the industry as a ‘brochure delivery mechanism’, whereas now they’re really seen as a trusted professional. It’s less about the number of meetings they’re having and more about the quality of those meetings,” she told Money Management.

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“What it really comes down to is the relationship of the BDM supporting the advice practice. If you have a great BDM, they become known in the office. These roles now need to have a broader skill set than ever before and need to add more value.”

Fabian Ruggieri, director at financial services recruitment firm RIVA Recruitment, said the type of support BDMs are providing to advisers is largely dependent on the type of investment product they are offering.

He explained: “If you’re promoting a more complex, actively managed strategy with the focus of generating alpha, whether that be in private markets or through alternatives, then the support is more around portfolio construction.

“Whereas if you are focusing on funds that provide traditional long-only equity offerings or fixed income offerings, then it’s about how the BDM helps advice firms to not only construct their portfolios but also help them grow their business.”

While previously dealer groups could provide practice management support to advisers, cost pressures have driven a reduction in the amount of assistance available.

Moreover, the industry shift from larger Australian financial services licensees (AFSLs) to the rise of self-licensing and boutique practices has amplified the demand for practice management guidance.

“Therefore, those smaller groups appreciate greater practice management support and guidance [from BDMs],” Ruggieri added.

Research by Wealth Data previously found all but two of the 113 new licensees that commenced in 2023 had less than 10 advisers. Similarly, Adviser Ratings discovered small licensee groups of one to 10 advisers have seen a 17 per cent rise since 2018.

The RIVA director continued: “The BDM role is not necessarily about selling a specific fund; it’s now about how do we help you as an advice practice grow your business and operate in a most efficient and effective way?

“A good BDM will always consider what they can offer beyond the product. Fund managers are now asking: how do we get better engagement from the advisers using our products? How do we offer more than just an investment product?”

Higher salaries for BDMs

The changing role of a BDM has also brought higher salaries along with it, which can reach as high as $320,000.

In April, RIVA Recruitment highlighted that BDMs who specifically specialised in managed accounts, passive funds, private equity and private credit markets had seen increased bonuses due to the strong inflows into those asset classes.

Research by Investment Trends and SPDR found the proportion of advisers using managed accounts has tripled from 18 per cent a decade ago to 56 per cent now.

“The growth in private markets, particularly private credit, has driven a lot of demand for BDMs, as well as the growth in managed accounts. As these private credit funds grow, they need BDMs to distribute and promote their products. That’s been a big area of growth as these funds can be quite profitable, so they have the ability to pay well,” Ruggieri unpacked.

A recent salary survey from Kaizen Recruitment also found senior BDMs can earn between $200,000 and $270,000 in the retail and wholesale space, and $220,000 to $320,000 in the institutional space.

As demand for BDMs in the private investment sector rises, Ruggieri noted the lack of equal supply of these professionals, ultimately pushing salaries higher.

Also speaking to Money Management, Adviser Ratings managing director Angus Woods noted how regulatory pressures are driving higher salaries for BDMs who can demonstrate their technical knowledge.

“In this industry, it’s a fairly technical role – you need to know the regulatory environment including best interest duty and design and distribution obligations. That scares a lot of BDMs unless you’re well-versed in that and you can communicate that to your practices or the wider market,” he described.