Asset Management

03:21 PM
Sean O'Dowd
Sean O'Dowd
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Is Wealth Management Missing the Message?

Competition with wealth management is fierce, so improving client communications is critical. Yet, a recent study on data driven marketing, reveals that marketing continues to stumble when trying to deliver a personalized experience.

Rising costs to do business and contend with regulation has forced some consolidation within wealth management over the past year. After a merger, the consolidation of technology quickly follows.

The technology integration is where the fun begins.

As infrastructure projects start, the conversation quickly leads to how architecture decisions must focus on client, product data and marketing to improve advisor's messaging, communications, interaction and overall productivity.

Accelerating client loyalty and advisor engagement is often a main goal. Yet a recent study by Teradata Applications on data-driven marketing (DDM), highlights a number of the issues that are challenging marketers, which also rings true for wealth management. These challenges are causing efforts to stumble. At financial firms, one of the top priorities identified in the survey is delivering a customized/personalized experience. Other areas of focus include improving marketing efficiency, measuring marketing to business objectives and linking marketing activities to earnings.

We can point to the typical investment planning process, which involves a lengthy, large paper shuffling and data input exercise to onboard a client, followed with a review of the plan with the client.

Then, if the advisor is diligent, the client may hear back in a year to review the last plan. A lot can change during those 12 months and clients are finding the lack of interaction alarming. More important, communication is a notable influence of how clients are deciding whether to maintain their advisor relationships.

Calls reminding clients that their money market account positions are running too high or receiving a general investment newsletter is not hitting a high degree of relevancy or timeliness. Our survey highlighted that only about 50% financial services marketers are satisfied with the achievements of their companies marketing program. There are improvements, such as automated alerts, improved segmentation and targeting to improve advisor outreach.

One of the challenges with improving messaging and marketing activities that was cited in Teradata's DDM survey was the lack of integrated data. In fact, 70% of financial services marketers agreed that data is the most underutilized asset in their marketing organization. And of those, 96% said they have obstacles that prevent them from using data to make more informed decisions.

The data problem is a large one, and it just doesn't involve data from inside a wealth management firm. According to research from CEB Tower Group, 90% of advisors cannot see a consolidated view of their clients' holdings that are held away from their firm. Worse, 76% cannot see a consolidated view of their clients' holdings within their own firm.

Before improving messaging, it is critical to improve data accuracy and availability before measuring marketing and communications activity. Which drives home what Peter Drucker once said: "If you can't measure it, you can't manage it." For example, our survey found that 90% of financial marketers report challenges with calculating Return on marketing investment (ROMI) or how marketing activities impact sales revenue. With the cost of acquiring and retaining advisors being so high, it is imperative that their outreach and the firms marketing efforts are squarely aligned with not only improving productivity but also revenue outcomes.

Not surprising, the survey found that many financial firms (roughly 66%) cited IT and marketing are misaligned. The multiple disconnects between the business and IT impact how effectively the front lines engage clients. Marketing operations itself cannot seem to get out of its own way to drive towards goals of understanding which initiatives are effective to begin with.

Many wealth firms are diligently looking at these issues and starting to understand how they may be able to improve advisor marketing, as right now millions of wealth clients can attest that too often the message is wildly off target.

Sean O'Dowd leads the Global Capital Markets program at Teradata for Industry and Marketing Solutions. In this role Sean focuses on industry strategy, marketing and field enablement. Areas of focus span financial market structure, regulations and technologies that impact the ... View Full Bio
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Becca L
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Becca L,
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10/15/2013 | 1:39:48 PM
re: Is Wealth Management Missing the Message?
Ha, he comes off as very needy, maybe the FA needs new friends..
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
10/15/2013 | 12:18:06 PM
re: Is Wealth Management Missing the Message?
Interesting POV. Now that i think of it, if an FA called me every month i might start to wonder why? Is the FA trying to sell me something? Is the FA not very busy? If the FA isn't very busy, why? Maybe the FA isn't very good and doesn't have many clients? Hmmm. Maybe I should get a better FA? LOL
Becca L
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Becca L,
User Rank: Author
10/14/2013 | 9:07:12 PM
re: Is Wealth Management Missing the Message?
My dentist sends me postcard reminders, e-mails, and calls me to set up appointments. It's like a good friend I catch up with twice a year. It's a great comparison for how we interact with those handling money. But twice a year is really enough, and extra attempts by my dentist to check in (are you still flossing? Yes? Great, carry on) would get annoying. So is once a year from wealth managers - or twice a year - really so bad?

This may be an unpopular opinion, but if I was a client that wanted frequent updates, I'd probably get it because I can always pick up the phone too. I think the (sad?) truth is many people don't want too-regular updates, and I wouldn't be surprised if wealth managers find their attempts at extra communication come off as more of a turn-off than benefit.
IvySchmerken
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IvySchmerken,
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10/10/2013 | 6:26:33 PM
re: Is Wealth Management Missing the Message?
I agree that improvements in marketing could help with servicing the existing client but I am troubled by lack of communication and cookie-cutter approaches. Again, remember, that when the client is not receiving any communications, they are still paying fees... fees such as 1.5%-2%. As an alternative, they could have invested in index funds. Where's the financial advice?
so'dowd015
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so'dowd015,
User Rank: Author
10/10/2013 | 4:11:33 PM
re: Is Wealth Management Missing the Message?
The relevance aspect of that communication is becoming increasingly more important - calling to say your cash is still in a money market account is not entirely helpful as the client is likely to know that. It's more about understanding needs and balancing products - a much larger discussion..
so'dowd015
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so'dowd015,
User Rank: Author
10/10/2013 | 4:06:21 PM
re: Is Wealth Management Missing the Message?
Agreed. To Greg's point the FA's are under the gun to grow AUM. That said, without doubt the process itself does need to improve - as do the strategies and products that are bundled and offered. The marketing is certainly part of client acquisition, but also trying to improve outreach to new clients. However, marketing improvement should be one part of an overall effort to improve communications entirely, which are linked to client needs and their portfolio activity, or lack there of. As we know, one of the approaches is with automated alerts and messages to prompt the FA - improving the end-to-end process that allows more time with clients for FA's is another aspect. In particular, on-boarding, report generation, etc.
so'dowd015
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so'dowd015,
User Rank: Author
10/10/2013 | 3:19:05 PM
re: Is Wealth Management Missing the Message?
It would appear to be something manageable, yet time again the customer and product views are lacking to support the type of customized messaging that is needed
Greg MacSweeney
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Greg MacSweeney,
User Rank: Apprentice
10/10/2013 | 9:36:00 AM
re: Is Wealth Management Missing the Message?
Advisors are always under pressure to do more, handle more clients and generate new business. It's hard for them to contact clients frequently. But you are right, how hard is it to contact clients at least every couple of months? Once a year seems like a really long time. We hear from our dentists more frequently than we do our FAs.
IvySchmerken
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IvySchmerken,
User Rank: Author
10/9/2013 | 3:02:52 PM
re: Is Wealth Management Missing the Message?
It is concerning that it takes financial advisors as much as 12 months to contact their clients about reviewing their financial plans. As you said, a lot can change in year. Yet, investors are paying a fee to have their money manage, a fee that is often 1.5% and up. In some cases, their assets are placed in portfolios made up of other mutual funds, so the adviser is not doing active management. They are really managing the asset allocation across different prepackaged strategies. Maybe there should be more emphasis on serving existing clients, with technology that helps automate the process, and less focus on marketing to get new clients in the door.
Byurcan
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Byurcan,
User Rank: Author
10/9/2013 | 2:09:13 PM
re: Is Wealth Management Missing the Message?
With all the data that financial firms have, it seems that delivering a customized/personalized experience is something they should have no trouble doing. It's good to see the study found this is an area of focus.
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