Fact-Based Trends From Cogent Reports™
Following a period in which advisor-controlled assets have been gradually shifting toward lower-fee, passively managed investment strategies, advisors still see an important role for active management. In fact, according to Cogent’s Advisor Brandscape, when advisors were asked to anticipate how their use of 15 specific asset classes would change, more advisors plan to increase their use of actively managed than passively managed equities over the next six months. This finding signals that advisors may be looking to diversify their clients’ portfolios, as more of clients’ core holdings have shifted to passive products. As expected, advisors in the broker/dealer channels are fueling the anticipated gains in actively managed strategies, while interest in active equities among RIAs is much weaker.
In addition, as advisors seek growth, four in ten (41%) plan to increase their allocations to emerging markets. Advisors’ growing interest in emerging markets represents a shift from last year, when only one-quarter of advisors said they plan to increase their investments in this area. Notably, interest in this category is primarily being driven by advisors in the National and Regional channels. Continue reading
Tallying quantities of topic mentions in daily financial news feeds can reflect what’s on the minds of investors and industry professionals.
- Exhibit A: regular coverage of the Department of Labor’s fiduciary rule.
- Exhibit B: regular coverage of robo-advisors.
- Exhibit C supports the theory in reverse: little news and, likely, little mindshare, though it deserves more attention. There is a fundamental change taking place in the way investment products are assessed, which is evolving the product ecosystem as well as how financial services market research firms explore those products.
A few days ago, I was in a meeting where someone defended a decision to cut Voice of the Consumer research before new product ideation sessions, citing a 1985 Playboy interview with Steve Jobs. To paraphrase, Apple wasn’t going to do market research on the Mac because they were the best judges of what’s great and what’s not. Jobs later added, “People don’t know what they want until you show it to them.”
For many marketers, the failure rate for new product introductions hovers around two-thirds. The inclination to drop research because discovery is not yielding new information is understandable, but killing consumer research because it’s somewhat costly and time consuming, or worse because the team thinks it knows better than its customers, is a perilous strategy.
This past week, Hulu officially released the beta version of its live TV streaming product. It’s real, and it’s competitive. It enters the fray of many live TV streaming products that have either launched or have been announced, including Sony Playstation Vue, AT&T’s DirecTV Now, Dish’s Sling TV, Xfinity Instant TV, and YouTube TV. Each of these products offers compelling features at price points lower than traditional Pay TV (satellite, telcos such as Verizon, and cable companies such as Charter Spectrum)—with some like AT&T, Comcast and Dish even cannibalizing their own Pay TV revenues with live TV streaming products.
For these new forms of video offerings to successfully gain customer buy-in and subsequent profitability, they can’t offer everything at rock-bottom prices, at least not forever. Programming costs remain high, even when leveraged with long-standing agreements, and finding the right niche varies not only by platform, but by provider as well.
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As technology becomes a bigger part of how financial advisors do their job, the need for external wholesalers is diminishing—at least in the traditional sense. To stay ahead of this trend, asset managers need to evaluate how well their current sales and marketing strategies meet the needs of advisors, as well as ways to leverage technology and tweak their distribution strategy to ride this impending wave of change.
Key things asset managers need to know:
- Advisors have less time. Advisors are taking on more responsibility, enduring higher levels of scrutiny regarding how they service customers and utilizing more tools to help facilitate how they do their job. These factors have pushed a full 25% of advisors to decrease the number of wholesaler meetings that they accept. This presents the first challenge: In-person meetings have historically been a very important part of forging and maintaining strong relationships with advisors, so how do asset managers dial down the personal side of selling without putting the stability of the relationship at risk?
- Technology is leading the way. You hear and read it everywhere. Email is the most effective and most desired form of communication, but the obvious issue is how to stand out among the hundreds of emails that land in the advisor’s mailbox. The second challenge: Email only works if the recipient is already engaged or open to being engaged. Adding another layer, if you are going to rely on email you better be sure the advisor you are trying to connect with actually prefers email. There is a whole subset that prefers social media to email. You can see in this article and video that email is not the way to engage these advisors.
As Randall Hula noted in Forging a Clear PATH to Corporate Innovation, it is critical to involve the right types of consumers at the right points along the Innovation Journey. Instead of simply focusing on your Target Consumer, it is important to recognize how other types of consumers—Lead Users, Creatives, Early Adopters and Brand Advocates—can contribute to and strengthen the innovation process.
These different consumer research groups form naturally around shared traits and preferences, the exact kind of commonalities that can spell gold for marketers—and market researchers. But the keys to tapping into their potential lie in understanding and identifying members of each group and knowing when exactly in the Innovation Journey they can contribute most.
Last month, YouTube TV rolled out its “streaming TV” service in five major US cities. Just before that, Comcast and Hulu announced their “streaming TV” services to join an increasingly crowded marketplace with industry heavyweights like AT&T (DirecTV Now), Dish (Sling TV) and Sony (PlayStation Vue). Despite the hype and the big brand names, success isn’t guaranteed for any of these services.
All of these new product offerings are essentially taking the traditional pay TV model that has been around for decades and making it available via the internet at a lower cost than their traditional TV counterparts. For the most part, reactions to these services have been mixed at best, which begs the question: Why aren’t these services knocking it out of the park?
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Throughout 2016 and into 2017, there has been no shortage of news coverage on the shift of assets from actively managed to passively managed investments in the wealth management industry. With the heightened focus on investment-related fees and increased skepticism over active portfolio managers’ ability to outperform the market index over the long term, many industry pundits are projecting a massive consolidation of active asset managers in the future, with only the strong and the few able to survive.
Yet at least one segment of the market continues to offer opportunity for active managers: the institutional market.
In fact, our research conducted in Q4 2016 found that institutional investors were reaffirming their commitment to actively managed strategies a maintaining or even increasing their active asset allocation levels despite the uncertain political climate during the latter half of 2016. Continue reading
As discussed recently in the blog Forging a Clear Path to Corporate Innovation, involving consumers in the innovation process leads to a richer pipeline of new product ideas. Even in the absence of this approach, companies are constantly generating ideas for new products. With all these ideas coming in—from consumers, employees, management, consultants—on which should management develop into full concepts for testing?
Given the relatively low rate of success for new product launches (less than 3% of new consumer packaged goods exceed first-year sales of $50 million—considered the benchmark of a highly successful launch; HBR, April 2011), and the cost and time in developing and testing concepts, selecting the right ideas for deeper concept testing is critical.
It’s common for qualitative research practitioners to cast a wide net to ensure no insight is left unconsidered, and many apply the same logic to their innovation efforts, aiming for the big, blue sky with the hopes of capturing a new, game-changing idea. In practice, however, I’ve seen this approach to innovation not only produce incremental or non-actionable results, but also shelve some of the best ideas to collecting dust. To find success in innovation, it’s important to act deliberately and remain cognizant about where you want (and don’t want) to go. Continue reading