DC Advisors Don’t Feel Support in Wake of DOL Fiduciary Ruling

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The Department of Labor (DOL) fiduciary ruling, despite not being fully enacted, as well as the recent calls for repeal and uncertainty regarding timing, has already altered the financial services industry substantially. Heightened fee scrutiny throughout the retirement industry is causing many DC plan providers to be on the defensive, focusing on ways to avoid the next potential pitfall. And although providers may be trying, half of DC advisors report they are not getting enough support from providers with regard to the new rules and regulations. This perceived lack of support in a time of great change will undoubtedly affect advisor perceptions of and loyalty to the providers they work with regardless of the future of the ruling. Continue reading

Ranks of Fee-Based Advisors Expected to Swell

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Despite the uncertain fate of the Department of Labor fiduciary rule, we already see advisors changing their business practices. According to Cogent’s The Future of the Financial Advisor™ report, advisors earning at least three-quarters of their total compensation from asset-based fees could comprise half (49%) of all financial advisors by the end of 2017, up from 38% presently. This shift toward fee-based compensation is primarily being driven by advisors in the National, Regional and Independent channels. Continue reading

As DOL Fiduciary Rule Sits on Ice, Is It Thumbs Up or Thumbs Down for Advisors?

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While the Debate Continues, the Upside of the Ruling Lies With the Investor

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Whether the Department of Labor (DOL) fiduciary rule continues to be delayed, eventually takes effect or ends up being repealed, the proverbial beans have been spilled, as many advisors and their respective firms have already taken the actions needed to comply, thus proving some areas of debate true and others false.

Here are the facts: more than one-quarter (27%) of all affluent investors and over one-third (36%) of advised investors—those currently working with a financial advisor—are now familiar with the DOL fiduciary rule, which expands the definition of an investment advice fiduciary. Among those who are familiar, most (74%) have taken action in the form of talking to their financial advisors, reading about the topic online, discussing the ruling with friends and family and/or reviewing the fees paid for the investments they own. Yet, only 4% have considered changing advisors, debunking the myth that the fiduciary rule has the potential to impose heavy churn on advisors’ client base, and suggesting that there’s more than meets the eye to the investor-advisor relationship. Continue reading

Finding Our Groove at The Quirk’s Event

vinylI was recently explaining the idea of an in-home interview to my husband. “You would never let someone into the house!” he replied, knowing that I would be skeptical, at best, if invited to participate in one. However, I would agree to participate in this type of immersive research. Even though I am unabashedly, undeniably and thoroughly biased, I believe that helps me understand why some of the busiest professionals working in some of the most sensitive and regulated industries agree to do the same.

Yes, financial advisors are busy. Yes, doctors have to be careful about what they say and share. Yet both are willing to meet with us at their offices and talk for rather lengthy periods of time. There are certain industries—financial services and healthcare being two prominent examples—where compliance concerns, traditional thinking and precedent can falsely limit the qualitative method possibilities.

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Financial Advisors and Investors at Odds Over DOL Fiduciary Ruling

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The future of the DOL fiduciary ruling is anything but certain. We do know, however, that the majority of financial advisors have some concerns about the ruling, with six in ten advisors (60%) favoring repeal. Advisors employed in the broker/dealer channels—particularly the Bank channel (82%)—and commission-based advisors (72%) are most likely to support repeal. In contrast, RIAs, most of whom are predominantly fee-based and already consider themselves fiduciaries, are more likely to oppose repeal (45%) than support it (29%).

Advisors Weigh in on the DOL Fiduciary Rule

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Stalwart Leadership in a Conflicted World

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The “new normal” catch phrase emerged after the Great Recession, marking a new era in investment management. Predictions of high correlations, muted returns, increased volatility and sustained low interest rates were true for a period. But fast-forward to 2017, and this period seems to have come to an end. Correlations have declined, the Dow Jones Industrial Average broke 20,000, the VIX stabilized and the Federal Reserve raised short-term interest rates in a show of confidence in the strength of the US economy. One could use the term “utopian,” perhaps, for characterization of recent market events.

At the same time, US politics has deeply divided the country across economic, gender, racial, religious and philosophical lines. Trust in political leadership is at an all-time low, and book sales of George Orwell’s 1984 are near all-time highs. Many view the current landscape as a “political dystopia.” Continue reading

Building Successful Advisory Relationships

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Amid an era of seemingly unprecedented political and global change, questions around the health and longevity of the financial markets abound. Investor trust in the financial community continues to be tested as factors beyond investors’ control threaten to jeopardize their retirement savings and financial wellness. Meanwhile, ongoing news coverage on the status of the DOL fiduciary ruling, sharpened emphasis on fees and the emergence of robo-advisory services as an alternative to traditional advice models are creating new challenges in the advisor industry. As such, understanding how investor-advisor relationships are established, the key drivers of advisor consideration, satisfaction and loyalty, and the role of trust and value has never been more imperative for advice providers.

Affluent investors don’t typically seek sweeping changes, especially when their long-term goals are funding a stable and healthy retirement. Nonetheless, when trust wanes and cheaper alternative solutions such as robo-advisors are within reach, change can become an attractive option. With those dynamics in mind, we are excited to kick off a qualitative study to explore the critical factors at stake across the key stages of the investor-advisor relationship life cycle. We’ll explore: Continue reading

Few Distributors Weather Decline in Investor Loyalty

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As a consequence of waning trust in the financial services industry, affluent investors appear to be retrenching, consolidating their investment accounts and concentrating more of their assets with a single distributor firm. While this is positive for primary distributors, it’s imperative that they increase customer loyalty of affluent investors to retain these new assets.

According to Investor Brandscape, investors report an average of 2.03 distributor relationships this year, down from 2.31 in 2015. Concurrently, the average percentage of assets that investors direct to their primary distributor, the firm with which an investor holds the largest proportion of his or her portfolio, has significantly increased to 81% from 70% in 2015.

Interestingly, the trend toward asset consolidation is driven by Millennials, Gen Xers and 2nd Wave Boomers, as these investors report holding a larger proportion of their portfolios with their primary distributor this year. Yet there is an inverse relationship between number of distributor relationships and age. Boomer and Silent Generation investors generally have fewer distributor relationships compared with Millennial and Gen X investors. Continue reading

Affluent Ready-to-Act Investors Are Prime Media Targets

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Only a minority of affluent investors are likely to make an additional investment in the near future, so it is imperative for asset managers and their agencies to equip themselves with the insights required to optimally target this critical audience. Based on purchase intent, we’ve identified three segments of “ready-to-act” (RTA) investors who are likely to open an investment account or invest in a mutual fund or ETF in the next three months.

The good news is that these RTA investors are prime media targets, according to data from our Media Consumption™ Investor portal. These RTA investors are more likely to use a variety of media outlets for business and financial news versus affluent investors overall.

Websites

RTA investors visit more websites each month than their non-ready-to-act counterparts. Those looking to invest in an ETF visit the CNN, CNN Money and Fox News websites, making those great options for advertisers targeting this segment. Outreach to investors looking to open an investment account should include the CNN, Bloomberg, Fox News and MSNBC sites, while asset managers seeking new mutual fund investors should target CNN, Yahoo! Finance and Fox News. Continue reading

Finding Ways to Maximize Engagement for Institutional Investment Products

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Getting through to an intended audience is the constant goal of marketers. There is little value in carefully curating messages and developing a plan for execution and release of those messages if they never capture the attention of a firm’s targets. The most return from marketing activities is created when the right message meets the right person at the right time. This is true across all industries, including the institutional space.

As a follow-on to our successful 2013 and 2016 advisor marketing collateral studies, Cutting Through the Institutional Marketing Clutter™ will expand insights regarding best-in-class approaches for maximizing the reach and impact of institutional investor-oriented marketing efforts. In a series of focus groups and in-depth one-on-one interviews with institutional investors and consultants, we will examine the full spectrum of marketing material, from email and white papers to provider websites and webinars.

What Will We Ask?

To better understand the marketing that is most effective with institutional investors and consultants, we need to understand the type and frequency of messages they are receiving, the aspects of the messages that are capturing their attention and the firms that are producing best-in-class communication. The report will provide insights into the marketing consumption habits of institutional investors and investment consultants, including their communication preferences, perceptions of content and digital marketing experiences. Continue reading