Archive for January, 2013

Finally Beginning To Get Social Media

Wednesday, January 30th, 2013

Sometimes fear drives action – and maybe financial services firms are finally becoming engaged in social media because they’re afraid that if they don’t, they’ll get left behind. I’m fine with that – I don’t care why social media is finally catching on in the financial services industry – but it’s about time!

According to a recent Cerulli Associates report on trends in retail product and marketing, 79% of firms say that the main motivation for embracing social media is to increase brand recognition. Enriching communications was also sighted by more than 70% of the 50 firms interviewed as a primary driver of their increasing interest in social media.

Why are these numbers encouraging to me? First, unlike consumer products companies, for example, where increasing sales is a primary driver of social media, that goal is secondary in financial services. Being a service industry, increased sales – eventually – would be a nice by-product of social media. Of primary focus, however, should be brand awareness, client servicing and establishing credibility; social media is a great way to do this and to increase the stickiness of assets and solidify long-term client relationships.

Also encouraging from the study is that 47% of firms – up from 13% last year – are integrating their social media efforts into their overall marketing efforts and consider them to be a main component of these efforts. It’s not only enough to utilize social media – you must use it correctly. It should be integrated into other marketing efforts – not stand alone.

(As an aside, sizable increases were seen in the use of LinkedIn, Facebook and Twitter.)

Whatever your motivation, or whatever segment of the industry you are involved in, their are invaluable uses for social media – if utilized correctly. There’s no time like the present!

Yes – Your Brand Does Matter – As Does Your Website

Tuesday, January 22nd, 2013

When advisors select an asset manager/fund family, what factors do they consider to be the most important? According to a recent study by Cerulli Associates, a well-respected industry research firm, client service comes in at first, with 51% saying that it has a major impact on their selection, and tied for second, with 34% of advisors each, is a firm’s website and their brand. Music to the ears of those of us who have been preaching this for years.

While this study focuses on the advisor/manager relationship, I don’t think it’s too much of a stretch to think that the results would be similar if clients were asked why they selected advisors. Recognizable names and brands go a long way in establishing credibility in our post-financial crisis world. The trick is to provide consistent messaging over a period of time to help build-up brand awareness – and then to deliver on your promises via excellent client service.

As we have stressed over the past month or so, if 2013 proves to be as bumpy as we think it will be, ensuring that you keep your current book of business satisfied will be one important key to at least maintaining your business. Building and maintaining your credibility via your messaging and servicing will also position you well for the future, regardless of what the economy is doing.

Importantly for small- to medium sized firms, developing and maintaining a brand – through your website, messaging and marketing efforts – is a lot less expense than advertising. Unless your the size of a Fidelity or Putnam or Schwab, for example, advertising can be prohibitively expensive. Developing a brand, a website and a plan to deliver your services consistently, is a lot more doable.

So listen to what the marketplace is telling you – trust is important – and part of being able to trust a potential partner is to receive reliable and consistent information from them – from their website and client servicing efforts – and to be able to rely upon them – via a recognizable and quality brand.

AK In The News: RIA Expansion Strategies In 2013

Tuesday, January 15th, 2013

Yesterday’s FundFire (a Financial Times Service) had an article on the expansion of an RIA into the NYC market in which I was asked to comment. Athena Capital Partners, a +$4 billion ultra high net worth client advisory firm from Boston opened a NYC office. The stated goal was to both service current clients as well as build the practice.

The firm had hoped to expand into this market in 2008, but those plans were put on hold because of the financial crisis.

Good strategy? Yes – I think in light of what is going to be a tough year (check our recent blogs on the 2013 outlook), this is a relatively low-risk, cost-effective means of trying to expand. Importantly, the plan includes efforts to better serve current clients, which I think is the key to 2013 success. It’s important for all firms to protect their current base of business in what is sure to be a tough asset-gathering year. What better way to demonstrate your commitment to clients than to move service personnel closer to them?

Opening a satellite office is certainly less risky than acquiring a firm and/or merging. While NYC is an expensive place to operate, it also does have a large concentration of assets.

As I say in the article: “Focusing on support of existing clients is particularly apt as a 2013 strategy, says Andrew Klausner, principal of AK Advisory Partners. “It’s going to be a tough year, politically and economically, and I don’t think clients will be willing to move providers,” he says. “So firms need to protect their current client base. Client servicing is an important theme this year, and for the ultra wealthy, it’s even more important.” Klausner also calls a firm moving closer to its clients with a new office a “low-risk strategy in a tough environment to grow.””



AK In The News: ETFs v. Mutual Funds in 2013

Thursday, January 3rd, 2013

I was asked to comment for an article in today’s Ignites (a Financial Times Service) on whether ETFs (passively managed investments) would continue to gain market share at the expense of actively managed mutual funds, as has been the case over the past few years. The article reviewed the results of a poll on whether or not investors would be putting more money into equities this year, and if so, in what types of investment vehicles.

Roughly 26% or respondents thought that investors would move back into equities this year, the most popular answer. This was followed by 23% which said that actively managed funds will lose ground to passively managed funds. These were the top two answers in a similar poll last year.

I agree more with the second answer than the first. To quote from the article: ” Andy Klausner, founder and principal of AK Advisory Partners, says that the trend of actively managed funds’ losing ground to passively managed funds and ETFs will likely accelerate somewhat this year. “Many individual investors are still on the sidelines, and there are still a lot of unknowns facing the economy this year, including the impending spending and debt limit negotiations in February or March…. I am not optimistic that overall inflows will be great this year, but whatever flows that there are should favor ETFs,” he explains.”

I continue to believe that this will be a very unsettled year in the markets, largely the result of geo-political issues here and abroad. Since there has been a lot of money on the sidelines, it is inevitable that some will come back into the market – but not nearly enough to compensate for the large outflows of the past few years.

What money does come back in, however, will favor ETFs over actively managed mutual funds for a number of reasons – including their lower fees, the ability they offer to easily diversify among sectors/countries and the fact that many brokerage/banks investment platforms have begun to include model ETFs programs to mirror their mutual fund offerings. This latter move will make ETFs more readily available to a larger number of investors.

What do you think?