The Financial Sector Is Up. Building Trust Is Key to Keeping that Momentum

The Financial Sector Is Up. Building Trust Is Key to Keeping that MomentumEditor’s note: This is part of our Trust and Value blog series for the financial services industry. In the coming months, we’ll share our thoughts and insight into what is happening and what we are seeing in the data we are constantly updating. Subscribe to FreshMR now so you don’t miss any updates.

What a difference a year makes. At this time last year, the market was recovering after hitting the “Jamie Dimon bottom.” Financial services firms faced another year pressured by low yield, compressed margins, cost cuts and new regulations like the DOL Fiduciary rule.

As the first quarter of 2017 comes to a close, stocks have helped advance the market to record highs. Rates are normalizing, and with that, slowly but surely, providing higher yield. The prospect of regulatory relief, economic growth and even tax reform are buoying the sector.

While things are looking up for the financial services sector, much of the potential positives have yet to actually be realized and, further still, they require political action, which has the endless capacity to disappoint. In addition, a number of long-term factors remain critical for financial services firms to achieve their own potential. Continue reading

Going Beyond Traditional Advisor Segments to Increase Marketing ROI

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Asset managers are collecting more data on financial advisors than ever but often struggle to transform their CRM systems into relevant and meaningful opportunities for advisor outreach and engagement. Undoubtedly, the competition for the attention and assets controlled by financial advisors (FAs) is intensifying, prompting many asset managers to seek better ways to target and communicate with advisors.

Data analytics and distribution teams spend about half of their time on data acquisition and data management, with just 14% of their time on more advanced analytics that fuel advisor segmentation and sales-lead generation, according to Applying Data to Distribution, a report by Ignites Research.* Perhaps more astonishingly, the report reveals that only one-third (39%) of asset managers incorporate advisors’ content preferences into advisors’ CRM systems, and one-fifth (11%) categorize financial advisors by types or “personas” that help determine their sales and marketing approach.

The current methods for segmenting the FA population for sales and marketing tend to be broad in nature and fail to take into account important differences in the attitudes, mind-set and preferences of FAs. Often, the desire to send more-targeted, customized communication is there, but firms fall short in their efforts to implement effective strategies given the additional time and money required to create their own proprietary models. Continue reading

Studies Show Optimism Is an Economic Catalyst

Studies Show Optimism Is an Economic CatalystMarket Strategies conducts numerous thought leadership studies for our clients. These studies are often released under the client brand so you may not even know they were conducted by us when you read about them in the New York Times or The Wall Street Journal, or hear about them on CNBC. While we can’t give away specific findings from our studies, we can tell you that the most recent studies have been impacted by a fascinating polling phenomenon—optimism. Continue reading

Institutions’ Growing Appetite for Risk

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The search for higher returns is the leading driver for asset allocation shifts

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The 2016 US presidential election sparked waves of populism and uncertainty. For the financial markets, the possibility of a Trump presidency seemed to cause a risk-on mentality, as his tweets were met with positive market reactions. And even before the Dow Jones Industrial Average surpassed 20,000, institutional investors signaled they were also adding risk. The survey fielding of our US Institutional Investor Brandscape report, fielded from mid-October 2016 to early January 2017, gives us a unique snapshot of the reactions of institutional investors in a distinct period for all of us.

Both pensions and non-profits de-emphasized de-risking as a driver of asset allocation changes this year. While de-risking is less of an issue for non-profits compared with pensions, this finding corresponds to the risk-on market mentality. Importantly, de-risking was the leading driver of asset allocation shifts among pensions in previous years and $1 billion-plus pensions continue to focus on risk. At the same time, corporate defined benefit plans place greater emphasis on the search for higher yield at the expense of de-risking. Continue reading

New Forces Dramatically Impact Financial Advisors

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The Future of the Financial Advisor Cogent Reports

Regardless of the uncertain fate of the DOL fiduciary ruling, one thing is certain: it unleashed new forces that will dramatically impact financial planning and advice for years to come. With many advisory firms and product manufacturers far down the road in adapting their strategies and communicating these changes to clients, it would be shortsighted for firms to fully reverse course now.

We already see advisors changing their business practices. As advisors move further toward fee-based compensation, predominantly fee-based advisors and RIAs are the only advisor segments that are growing. As a result, we’re seeing advisor-controlled assets gradually shifting toward lower-fee investment products. Compounding the challenge for asset managers, advisors are becoming less receptive to traditional wholesaler outreach and are instead seeking more personalized, on-demand support. Continue reading

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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