Financial Advisors

Top Five Questions to Ask a Third-Party Marketer – Before Engaging Them for Fund Distribution

Authors: Kevin Guerette, SVP, Director of Distribution Strategies and President, Ultimus Fund Distributors, and Stacy Havener, Founder & CEO, Havener Capital 

Over the years registered fund managers have made the decision to outsource some or all of their distribution efforts. During that time, a number of new models for external, active distribution have emerged and technology is now playing an increased role in how wholesalers are approaching their target audience and engaging with prospects.

To help fund managers identify and engage with the wholesaler that has the approach that fits and supports your distribution efforts for your specific funds, here are five questions to ask potential third-party marketer (3PM) partners. After each question, I have provided my insights based on my 20 years of experience of working with fund managers and clients of Ultimus. In addition, I’ve asked Stacy at Havener Capital, a third-party marketer, to weigh in as well.

1. How many money managers do you work with and what asset classes are they investing in?

Ultimus: This information is important to gauge how many other funds a 3PM may be representing and if they represent funds with a similar strategy or strategies to your fund(s) which may ultimately present a potential conflict.

Havener: Agreed. What is the niche / specialty of the 3PM? Do they specialize in a type of a manager (boutique or big), asset class (equity, debt, alts, impact, etc), vehicle type (LP, SMA, 40-Act, ETF) or even evolutionary stage (start-up, new fund launches, turnarounds etc.)? And then secondarily how do they structure their roster? Be wary of firms that have competing strategies – you don’t want a partner with a “throw it against the wall and see what sticks” philosophy.

2. Which channel or channels are you focused on or seeing the greatest amount of success?

Ultimus: Depending on the goals a fund manager has or the challenges of some distribution channels, many 3PMs specialize in a specific segment of the market – and it may or may not be best suited based on the dynamics of your fund(s).

Havener: Great question that ties back to the “What’s your specialty?” question above. A 3PM that focuses on RIAs and family offices can have a smaller, more nimble sales team but a firm that serves the wirehouses will need a much larger sales staff. Also think about the evolutionary stage of your asset management firm … it’s typically difficult for boutique funds to win at the wirehouses, so don’t let dollar signs cloud your vision of your next best step.

3. How will you track and report your activity relative to our fund to us?

Ultimus: It will take time for any 3PM to demonstrate success based on AUM, but in the meantime a great way to gauge or anticipate that the effort is heading in the right direction is to measure the activity – and the more detail they are able to provide the better.

Havener: Super important topic – transparency. 3PMs should be able to give you a sense of important milestones, or key performance indicators (KPIs) that let you know the effort is working. Raising capital takes longer than anyone thinks it will, so it’s important to have other measurables while you work toward getting the dollars in the door. There should also be regular communication between you and the 3PM to review those KPIs, discuss the sales funnel, and ensure both sides are aligned in the mission and the messaging.

4. How are you compensated? Retainer, minimum, commission based or -revenue share on assets raised?

Ultimus: 3PMs have a number of ways that they will bill for their endeavors.  It is common in most cases to base their fee on the assets raised, but there are a number of other possible charges that may be involved.  Minimums, T&E, retainers and draw-downs, to name just a few.  Make sure you are comfortable with the costs you may incur.

Havener: Alignment of interests is big here. In an ideal scenario, you want your 3PM to grow and earn as you grow and earn. Think about three levers: retainer, revenue/share or commission, and time. You can move those levers around to arrive at a structure that works for both sides. You could also build in milestones – a bonus for important things like getting on the platforms or critical AUM levels etc. Both parties need to open-minded and creative.

5. How have you adapted your efforts during the pandemic?

Ultimus: Although several advisers and branches have begun to schedule meetings many others are still prohibiting wholesalers from visiting their offices.  3PMs should have adapted ways to engage their audience during these trying times and have integrated digital efforts, webinars and virtual meetings into their programs.

Havener: Virtual is the new reality, isn’t it? At the end of the day, people invest with people, so finding ways to conduct meetings that are both educational and fun can work well. In addition to virtual meetings, digital marketing and social media have proved to be particularly powerful not only in generating leads but also in moving deals forward. The trick is to create social media that isn’t merely a “corporate update” but reflects the authenticity of the people behind the portfolios.

Final Thoughts

In addition to these queries, there are several other questions we would encourage you to ask any 3PM firm. We welcome the opportunity to speak with you to share more insights regarding some of our experiences that our fund manager clients have had with third-party marketers and especially their efforts to establish successful relationships with external distribution teams. Please feel free to reach out to me directly at I look forward to hearing from you.

Originally published on

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Ultimus Fund Solutions

Ultimus Fund Solutions (Ultimus) is a trusted business partner to asset managers, delivering customized Fund Administration solutions. The company is leading provider of full-service fund administration, accounting, and investor solutions to support the launching and servicing of registered funds, private funds, and public plans. Ultimus also offers customized structures designed for the unique needs of pensions, endowments, foundations, and other large institutions.

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