Affluent Investors: Big Emotions and Purchase Intent

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Ready-to-act Investors Reacted to Positive Market Environment in Q3 2018

No one appreciates being told that they “are overreacting,” especially in the midst of expressing a big emotion. On the contrary, having one’s feelings heard and validated serves as a powerful response and creates opportunity for further engagement, a valuable lesson for distributors and product providers to keep in mind.

Q3 began amid ongoing trade disputes between the US and its trading partners and news of the economy having grown 4.2% during the previous quarter, fueled by a strong labor market. Economic growth helped spark investor optimism, along with hope and confidence in the investing environment. By some accounts, the current US equity bull market earned the longest tenure in history this past summer, boosting consumer confidence to an 18-year high. The third quarter finished with the large-cap S&P 500 index turning in its best quarterly performance in nearly five years. Despite a 0.25% increase in interest rates in September, affluent investor sentiment remained consistent from June through the end of the quarter. Continue reading

Financial Planning Games: Financial Advisors Compete Head-to-head with Planning Websites

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My firm’s CEO, Melissa Sauter, lives by the motto, “fail to plan, plan to fail,” and encourages her employees to do so as well. Based on life’s often harsh lessons around preparation, “fail to plan, plan to fail” seems to resonate with most people, including affluent investors, as more than half (58%) report having a financial plan and another one in five (19%) is currently working on one.

However, 17% of investors with at least $100,000 in investable assets admit to not having started to make a financial plan, including about one in five investors ages 54 to 62, arguably beyond the ideal time to already have a financial plan in place.

Financial planning is the act of creating a plan where you establish a set of goals in your life and figure out how much money it will take to achieve them. This involves saving money, investing, and getting insurance to protect you and your loved ones. It also includes having legal documents created in the event of an emergency so that your family is prepared.

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Common Traps of Top-performing Customer Experience Programs

Common Traps of Top Performing Customer Experience Programs

You’ve achieved your customer experience (CX) goals! Congratulations! … Now what?

When our clients’ organizations commit to their CX measurement goals (CSAT, NPS), internalize the key drivers of performance improvement and integrate them with operational priorities, they often succeed in hitting their CX outcome measure goals.

While this is always good news, it can create new challenges—“happy problems,” as we’re told to see them. Here are some common CX program traps to avoid after you hit your CX goals: Continue reading

Investing Is Not a “One Emotion” Sport

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Pre-retirees Express Uncertainty and Hope in Q2 2018

Most parents can attest that raising children is not a “one emotion” sport. The anticipation and joy of witnessing a child reach a milestone like starting kindergarten is often combined with feelings of sadness over the completion the toddler years. The same phenomenon occurs with investing. More often than not, investors report a mix of sometimes conflicting emotions

Global consternation over trade between the US and China coupled with tensions between the US and Russia caused a bumpy start to the second quarter of 2018, instilling feelings of uncertainty and anxiety among affluent investors. Sentiment shifted more toward hope and optimism in May with positive news about the lowest unemployment rate in 18 years and strong Q1 earnings. However, news of the Federal Reserve raising rates and the pace of US GDP growth being the slowest since 2013 overshadowed a more than 3% gain from the S&P 500 for the quarter, to which investors reacted with a mix of uncertainty and hope.

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Building Effective Apps and Websites for Advisors

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Digital tools like apps and websites are increasingly important for asset managers to incorporate and enhance within their overall advisor marketing and engagement efforts. In fact, recent quantitative data gathered by Cogent Reports have found that mobile apps generate a 47% lift in advisor consideration, with websites trailing closely at 46%. While our quant data looked at the impact of mobile apps and websites, we used qualitative techniques to uncover what providers can do to ensure their mobile apps and websites are engaging advisors and providing a consideration boost.

Digital technology is interwoven across all types of advisory tasks from client relationship management, communication, investment research and news consumption to portfolio construction, risk management and asset allocation. Advisors are seeking new technologies to streamline processes and make the dissemination of information easier. So what do advisors want when they’re using these digital tools?

Mobile Apps

While investment news and financial apps are surging in popularity among advisors and are primarily valued for news notifications, asset manager apps are gaining traction for different purposes. Advisors consider these apps valuable for staying on top of product information and accessing client information on the fly. Continue reading

DC Plan Advisors Are Leveling Up

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The defined contribution (DC) plan market is increasingly dynamic with a variety of industry forces and innovations at play, and so, too, is the makeup of the DC advisor population. Findings from our newly released Retirement Plan Advisor Trends™ report reveal important changes in the profile of financial advisors who are active in the DC space, affecting the business relationships these advisors have with plan providers and investment managers.

On the surface, the DC advisor population looks stable, with two-thirds of financial advisors (65%) continuing to oversee DC plan assets. However, DC “dabblers” appear to be backing away from the complexities of servicing the DC market. Today more than nine in ten (93%) Emerging DC advisors—those managing less than $10M in DC assets—report less than one-quarter of their total AUM is comprised of DC business: a significantly greater proportion than in 2016 (88%) and 2017 (86%). Continue reading

Mobile Apps Boost Advisor Consideration

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Whether due to the increasing reliance on technology, the desire to reduce marketing costs, better segmentation or a combination of all of these, it’s clear that asset managers are streamlining their advisor marketing efforts. Continuing a trend we observed last year, the number of advisor marketing touches across all financial services providers has declined. In a recent study of over 1,200 financial advisors, advisors indicate that they receive an average of 95.7 marketing touches from financial providers each month, down from 100.9 in 2017 and 110.1 in 2016.

This decrease in touches is an overall trend rather than the scaling back of one specific medium. With the exception of social media outreach and road show invites, advisors report a continued decrease in the number of touches from email, webinars, internal and external wholesalers and print mailings. Given these facts, with fewer opportunities to reach advisors, it’s imperative for providers to maximize the impact of each touch. Continue reading

Financial Literacy: Exploring the Financial Terms Consumers Do and Do Not Understand

The financial literacy of employees and investors remains an ongoing concern. The common definition of literacy is “competence or knowledge in a specified area.” As organizations seek to evaluate financial literacy, it is important to focus on the competence factor in the current learning environment.

At a time when more information is available than ever, by many orders of magnitude, most consumers will simply wait to google a term when they “need to know” it. Unfortunately, many financial situations do not come with triggers to cue individuals that now they need to know something. Rather, consumers need to start with a functional understanding of key concepts so they can execute financial planning and investing.

In a self-funded study, our financial services research division presented US consumers aged 18+ with a list of commonly used financial and investment terms to gauge a public level of understanding. Respondents self-evaluated how thoroughly they understand the given terms. For some of the terms, a working and ongoing understanding of the concept is important to routine saving and investing.

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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