The Rise of Model Portfolios—A Blessing or a Curse for Asset Managers?

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The vast majority of advisors rely on model portfolios to meet the needs of their investment clients, further distancing the underlying asset managers from the financial professionals using their products. Many firms are struggling to adapt to changing distribution models that include serving advisors directly as well as through model portfolios provided by the home office or third-party providers.

Nearly half of advisors (47%) say they use models they build themselves. That said, many of these same advisors are starting from templates developed by leading asset managers. Three in ten (29%) use models provided by the home office, while 18% use models offered by third-party providers.

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The Reason Many DC Participant Communication Programs Fail

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In their effort to develop effective participant communication strategies, plan providers need to serve multiple audiences. Participant education needs can vary by generation, investment knowledge, wealth or income level, marital status and even gender. Yet one facet many participant communication professionals don’t consider is intentwhether the individual participant is planning to make a change to his or her retirement plan account. Depending on their level of intent, participants will either require more specific information to inform their upcoming decision, or content that validates their current retirement saving strategies or motivates necessary changes.

Who Are “Ready-to-act” Participants?

Ready-to-act (RTA) Participants are those who are planning to make a change to their current employer-sponsored retirement plan in the near future. And they are few and far between. Our most recent DC Participant Planscape™ survey found that only one in six participants intends to make a change to his or her plan investments and even fewer (13%) are likely to increase their contribution amount in the near future. RTA Participants are more likely to be male, younger (Millennial or Gen X) and use advice to manage their investment portfolios. In fact, half of RTA Participants planning to make an investment change are working with a financial advisor. Conversely, Not Ready-to-act Participants, those who do not anticipate making changes to their retirement plan accounts, are much more likely to be self-directed, managing their investments without any professional assistance. Continue reading

Technology Changed the Purchase Journey, Now Research Has to Change Too

How Brands Can Benefit from Path-To-Purchase ResearchDo you know where your customers are coming from, how they decide which providers they choose and why? Technology has drastically changed the purchase journey for most businesses on multiple levels. Most purchase journey research is still treating the path as linear even though it is becoming increasingly dynamic and web-like, with unlimited interactions. While the linear-path to purchase journey research allows you to gain a general understanding of what your customers’ purchase path looks like, it doesn’t give you the details to craft a high-functioning customer acquisition and retention plan.

The reality is that capturing “how and when” people buy is pretty easy. But the journey is complex, so the tough part is distilling the data into useful information so you know exactly which actions to take. Path-to-purchase research should go beyond what the journey looks like—it should reveal the most important interactions for your potential customers and your brand. Continue reading

The Power of Consistency

The Power of ConsistencyConsistency sounds boring. We’re going to have chicken and broccoli for dinner again. I ran my 30 minutes on the treadmill again. Consistency doesn’t lead you to discover the perfect town when you’ve made a wrong turn or meet the band when you’ve stayed well past the encore at a random weekday concert. But consistency can be powerful. Continue reading

More Employers Are Offering Financial Wellness Programs This Year

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Defined contribution (DC) plan sponsors wear many hats within their organizations, often juggling responsibilities like employee satisfaction, benefits and of course, the management and oversight of their firm’s 401(k) plan. Many are now adding employee financial wellness to the list, as employee happiness and reduced stress both in and out of the workplace are proven to increase the quality and quantity of deliverables and output. A recent report from PwC found that 25% of employees admit that stress from financial issues has been a distraction at work and 18% indicate financial stress has impacted their productivity.* Financial wellness offerings give plan sponsors an impactful way to share financial guidance with their workforces in an attempt to diminish financial stressors.

This year, significantly more plan sponsors are incorporating financial wellness offerings into their benefits programs (21% up from just 16% in 2017.) This increase is being driven by companies in the Small-Mid plan size segment ($5M to less than $100M in plan assets), where 30% of plans are now offering these types of programs. Continue reading

If Opportunity Doesn’t Knock, Build a Door

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Despite new challenges in the financial services landscape, changing market dynamics offer new opportunities for those willing to adapt.

The economy is strong, with record low unemployment and robust market performance. Furthermore, the Dow topped 26,000 for the first time in January. However, rising trade tensions, divisiveness and political uncertainty are causing many investors to question when the bottom will fall out. For active managers, many of which lost share to index funds during this period of stability, the question arises, could there be a silver lining?

At first glance, the competitive environment appears inhospitable to firms lacking the scale to compete on price. Vanguard and iShares have amassed record inflows over the past year, pressuring competitors to lower their expense ratios. We’ve also seen increased M&A activity among mid-sized managers seeking global scale and broader distribution for their products as broker-dealers constrict the number of managers on their platforms. Continue reading

Satisfaction With Institutional Asset Managers Has Taken a Hit

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Satisfaction with Institutional Asset Managers Has Taken A Hit | Cogent Reports

It’s no secret that 2017 closed with a period of remarkable and sustained market expansion. Capping a year that featured strong economic growth, an improving job outlook and bolstered consumer confidence, the Dow Jones Industrial Average index hit record high after record high in the fourth quarter.

Despite this historic bull market that boosted performance for many investment strategies, institutional investors’ overall satisfaction with their existing asset managers has declined sharply from the previous year. Specifically, institutional investors surveyed in the eighth annual US Institutional Investor Brandscape® study report an average top 3-box satisfaction score of just 60%, versus 67% in 2016. Continue reading

Don’t Go Changing Self-directed Investors

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DIY Investors Live in a Constant State of Uncertainty and That’s OK

A client recently commented to me that self-directed investors are more challenging to serve. Representing only one-third of all affluent investors, these do-it-yourselfers neither work with traditional financial advisors nor use advice from other sources including distributors and asset managers. A look at investor sentiment during the market volatility in Q1 2018 sheds some light on key differences in the self-directed investor’s mindset compared with the traditionally advised (those currently working with a financial advisor).

Overall, affluent investors started 2018 with optimism and hope in the current investing environment. Yet concern about inflation and the impact of trade sanctions began in late January. Financial advisors, asset managers and distributors all dusted off and updated their market volatility messaging and outreach in anticipation of negative market action. Following February’s 10% correction in the S&P 500 Index and the VIX reaching a peak of 37 for only the second time in the past five years, investors ended the first quarter with far less optimism. In fact, the top-cited emotion in March was uncertainty along with a significant increase in fear. Continue reading

Four Things the SEC Can Teach Us About Messaging

In an historic town hall held this week in Atlanta, all five Commissioners from the Securities and Exchange Commission sat mere feet from the general public and spent more than the planned two hours educating through a mix of prepared content and Q&A. The same commitment to investor protection that leads to the SEC being well-known for regulation also drives its emphasis on teaching. Though our work at Market Strategies and that of our clients largely rests in the private for-profit sector, we all share the same goal of communicating so that the target audience will listen and understand. From that perspective, we can take away a number of lessons from the way the SEC’s message was delivered…

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Opportunity is Knocking—Are You Listening?

Opportunity Knocks—Are You Listening?Addressing Hidden Needs in a Mature Insurance Marketplace

A recent TechCrunch article spotlights Lemonade, an insurance upstart that is boldly reimagining the customer experience. The young firm has already made waves with its use of cloud technology and artificial intelligence to sell insurance, and now it is going a step further by crowdsourcing a full rewrite of its insurance policy from scratch, with the goal of devising documents that consumers can actually understand.

Lemonade has correctly identified a critical pain point for insurance consumers—the underlying product is begging for innovation. Traditional policy documents are inscrutable and full of legalese and were never written with customers in mind. The policy is a great place to start the insurance product revolution, but does Lemonade go far enough?
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