Loyalty Has Benefits On and Off the Field

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With Super Bowl LII behind us, the professional football season of 2017–2018 is over but a tremendous amount of loyalty remains among New England Patriots and Philadelphia Eagles fans. One doesn’t have to spend too long watching an NFL game to witness what loyal fans will do to cheer on their team in the pouring rain, sub-zero temperatures, or near-whiteout snowfall. The feeling of support and allegiance from fans for their teams is palpable.

What drives fan loyalty? The team, an individual player, the coach, the owner or various combinations of all of the above. Influence on loyalty from a combination of factors also holds true for investors working with advisors and other investment professionals and their respective firms. In fact, the industry average loyalty to an investment firm among advised investors is substantially higher than among the overall affluent investor population, indicating that the inclusion of a financial advisor or other type of investment professional offering advice is key to client loyalty, referrals and retention. Continue reading

Despite an Uncertain Fate, DOL Fiduciary Rule Leaves Its Mark

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A Shift Toward Level Compensation for Commission Products Is Likely to Shape the Future Product Landscape

While the regulators in Washington, DC, continue to kick the can down the road, there’s no doubt that the DOL fiduciary rule is prompting changes in advisors’ practices. As previously reported, advisors are moving further toward fee-based compensation, and predominantly fee-based advisors and RIAs are the only advisor segments that are growing.

Recent research with variable annuity (VA) producers further supports the trend of changing compensation models. Nearly half (44%) of VA producers agree that their firm is encouraging a level compensation structure that does not vary with the particular investment recommended. This proportion climbs to more than half in the National and Bank channels (56% and 57%, respectively). As a result, advisors expect to allocate fewer new dollars to VAs going forward, with one-third of advisors looking instead to the best interest contract exemption for commission products.

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Technology, Language and Educational Capabilities: Key Levers in the DC Market

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While DC plan providers are vetted stringently on their respective abilities to provide personalized, proactive client service and customized plan design, there are other factors that are essential to demonstrate in the recordkeeping suite. When we asked DC plan sponsors, heavy DC advisors and DC consultants which factors can best distinguish a DC plan provider from another competitor or incumbent firm, technology, language and educational capabilities were cited as must-have services with strong interplay.

Technology
Serious investment into technology, making processes more efficient, effective. Designing interactions with participants to be easier, more mobile, transparent, resonating with all types of employees.” DC Advisor, RIA

Language
“If you’re not investing in technology and you’re not investing in language, you’re just milking it. You’re not going to be around in five years. … In this day and age when people can withdraw money at an ATM in fifteen different languages, the fact that someone can’t get literature for their 401(k) in Spanish, it’s appalling.” DC Consultant Continue reading

Dear Energy Santa: Make Sure You’re Connected

Dear Energy Santa: Make Sure You’re Connected

The Internet of Things (IoT) is catapulting the energy industry into a new era of products and services, and the demands and expectations of utilities are rapidly changing. According to the IDC, energy utilities are currently the third largest investor in IoT ($66 billion) and this will alter how these companies interact with their customers. As an 80’s kid, I am reminded of a memorable song by Stereo MCs entitled Connected. The song’s chorus goes:

If you make sure you’re connected,
The writing’s on the wall,
But if your mind’s neglected,
Stumble you might fall…

More than ever, our connections with people, places and things drive and define who we are and what we do. These connections are directly impacted by the IoT explosion across our society. Back in 2008, more “things” were already connected to the internet than there were people in the world, and the momentum of this trend has multiplied over the past 10 years.
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Advisors Win in Aftermath of DOL Fiduciary Rule

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Advisors Win in Aftermath of DOL Fiduciary Rule

Use of advice leads to stronger trust in the industry

While many industry insiders feared the worst, financial advisors actually fared very well over the past year—a year filled with threats of the Department of Labor (DOL) fiduciary rule casting doubt on the industry overall as well as creating intense scrutiny on fees. In research earlier this year, we observed financial advisors were feeling positive about the intention of the fiduciary rule but also concerned about the implementation potentially damaging their reputation among investors. Remarkably, quite the opposite occurred.

While many advisory firms moved forward with changes in how advisors provide financial planning and communicate guidance, especially with respect to IRAs, only about one-third of affluent American investors became aware of the fiduciary rule. Among those familiar with the rule, most reported their impression of advisors was unchanged and an additional 27% cited that their perception of advisors had actually improved, evidence that preparation efforts toward compliance with the rule were not in vain, even amid the extensions and delays recently announced with fiduciary rule efforts.

Perhaps most telling is the level of trust in the investment community among affluent investors working with financial advisors, as it is significantly higher compared with prior years. In fact, more affluent investors have turned to a financial advisor in 2017 as a trusted source of investment. Continue reading

How to Expand Traditional Banking Relationships

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How to Expand Traditional Banking Relationships

Opportunity Lies with IRAs and the Younger Generations

National and regional banks are facing a big challenge in establishing themselves in the wealth management industry—even among their best, most affluent bank customers. Although it would seem to be a natural extension of banks’ offerings, fewer than 20% of affluent investors would even consider their primary bank for wealth management products and services. Moreover, banks claim an average of just 20% of the total assets from the few customers who would consider them for wealth management offerings, so there is ample opportunity for wallet expansion among banks’ current client base.

To dive deeper into potential opportunity, we asked affluent investors how likely they would be to consider their primary bank for a list of wealth management product and services. Nearly one in five would consider opening an IRA with their primary bank. This positions IRAs as a gateway for aspiring banks to move traditional banking customers into their wealth management businesses and obtain a greater percentage of their customers’ overall assets.

Highlighting an opportunity to target further, significantly more affluent Millennials and Gen Xers are likely to consider their primary bank for wealth management products and services than not. Targeting these younger generations through their preferred digital platforms will give banks an edge and the potential boost to consideration from these investors. Continue reading

Competition for Target Date Funds is Heating Up

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Competition For Target Date Funds is Heating Up | Cogent Reports

Competition for target date funds in the DC market is showing no sign of abating. DC Specialists (producers managing $50M+ in DC AUM) are looking outside the two dominant target date fund providers—American Funds and Vanguard.  While American Funds and Vanguard continue to square off for the greatest proportion of target-date-fund dollars among this elite plan advisor segment (34% versus 33%), three investment managers are gaining ground. One in five DC specialists is likely to endorse Fidelity (23%), BlackRock (21%) and T. Rowe Price (21%) for sponsor consideration, compared with a respective 15%, 17% and 14% reported one year ago.

Target Date Funds Provider Recommended Most Often | Cogent Reports Continue reading

Facebook’s Failed Cricket Bid Foreshadows a Sports Evolution

Facebook’s failed $610 million dollar bid to stream the India Premier League, a popular cricket league, raises a basic question: Why did Facebook bid in the first place? It’s a social media company, not a sports broadcasting company.

The bid is an indication of Facebook’s evolution from a social media platform to a global entertainment and connection platform, shifting from a website where you check in with your friends and family to a website where you read the news, watch videos, shop and much more. Per CEO Mark Zuckerberg, Facebook’s overarching goals for the platform are to “connect everyone, understand the world and help build the knowledge economy.”

Facebook’s entrance into sports business accomplishes two goals vital to its brand growth: gaining new users and keeping current users connected and engaged. Engagement is a hot topic for any social media platform. The key to Facebook’s longevity (or any social platform, really) is to keep users returning and exploring new features—ultimately deepening their usage. If Facebook isn’t constantly evolving, it risks becoming stale.

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Panning Morningstar Ratings Will Have Little Impact on Behavior

Advisors and investors have been sharing their mutual fund decision-making process and factors with us for years. As a market researcher in financial services, I can tell you that while Morningstar fund ratings don’t always make it to the top of the stated list immediately, they are regularly referenced, and advisors note that the ratings are a rare data point that seems to resonate with clients. The ratings also often capture attention when marketing material is tested. This is especially true when the material is for a brand not already at the top of an individual’s consideration set. And, for every time an advisor admits that the ratings have some impact, there are other times when the impact is understated or even unknown to the advisor.

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How AI & Machine Learning Technology Is Being Applied to Brand Strategy

Artificial intelligence (AI) was once thought to be the wave of the future, but AI technology is now present in our daily lives. We use Siri, Google Now, Alexa, and other virtual personal assistants for schedule reminders; music and movie recommendations are driven by machine learning through apps like Spotify and Netflix; and numerous smart-home devices adjust settings based on learned behaviors and preferences. AI technology is widespread, with applications all over the spectrum.

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