Archive for September, 2013

AK In The News: Ameriprise Casts Wider Net With Client Call Centers

Tuesday, September 24th, 2013

I was asked to comment about an article in today’s GatekeeperIQ (A Financial Times Service) about Ameriprise’s strategy to set-up call centers to broaden the firm’s mass market reach as well as to help advisors focus on their most profitable clients. I think it’s a great idea.

On the first point, despite its advertising, Ameriprise clearly tails others such as Schwab and Fidelity in name recognition. Therefore, if the goal is to proactively broaden this reach, then call centers are a good strategy to do so.

On the second point, many of us in the industry have advocated for a long time the theory that advisors can only serve a finite number of clients effectively. While this number varies by the size of the support staff, technology, etc., it holds for all advisors. The answer for many to limit the size of their businesses has been to set account and/or relationship minimum account sizes higher.

But what about existing clients? While we all know there are sometimes reasons for having smaller relationships – family or friends or future potential – the more successful advisors find ways to minimize this number. Therein lies, in my opinion, the great positive of what Ameriprise is doing. As an advisor, saying that you are going to “fire” clients is an easy thing to say – but actually doing so is a lot harder.

To quote from the article: “For advisors, it provides a graceful option to offer to smaller, less profitable clients. But to “fire” those clients “is probably harder psychologically to do without having a place to send them,” says Andy Klausner, founder of AK Advisory Partners, a consulting firm. “In this case, Ameriprise is offering its advisors a way to leverage their businesses while having an almost-turnkey solution to recommend to these smaller clients.””

I would expect other firms to follow suit.

Advisors – Are You Social Yet?

Thursday, September 19th, 2013

Compliance concerns aside, many advisors continue to take a wait and see attitude about utilizing social media in their businesses and client servicing efforts. While more advisors are taking the plunge than before, the financial services industry remains a laggard. I have been advocating the use of social media for a long time, because it’s more important than ever to give clients what they want, when they want it and delivered how they want it.

A number of studies recently released by some reputable organizations reinforces the case for social media:

1) Forrester Research released a study in July which showed a high correlation between the number of times affluent investors interact with financial advisors in social networks and the investors’ payments for advisors’ services. This correlation was almost twice as much as the relationship between the number of interactions in person or by telephone.

Now, correlation does not necessarily indicate causation, but the large margin here does indicate that social media does have a significant benefit. One reason is perhaps the fact that social media allows investors to leverage their time by communicating with multiple clients at one time, while the other media mentioned above can only be done with one client at a time.

2) Accenture recently surveyed 400 advisors:

  • 77% affirmed that social media helps them with retention
  • 74% agree that social media helps them increase AUM
  • 73% say that social media serves to increase client interaction
  • 40% indicate that they have gotten new clients through Facebook, 25% through LinkedIn and 21% through Twitter

3) Cogent research surveyed 4,000 investors with more than $100,000 in investible assets, and found that a growing number use social media to help keep informed about personal finance and help them make investment decisions. In fact, seven out of ten investors who use social media for investment research (24% of the total) have changed their relationship with their investment provider because of something that they have read on social media.

If you haven’t embraced social media yet, it’s time to start kicking the tires – or  you will be left behind.

AK In The News: American Funds Should Launch More Products

Wednesday, September 18th, 2013

I was asked to comment on a poll of Ignites (a Financial Times Service) readers on whether or nor they supported American Funds’ decision to launch a number of new funds, primarily focusing on non-core areas. More than 77% of respondents agree that the firm should launch new products,as this shows that the firm is evolving and meeting advisor demand for new products.

Only about 14% of respondents disagree with the move, arguing that it will cause the firm to loose focus and may hurt the management of their current funds. Historically, the firm has been known for having a relatively small, conservative lineup of mostly domestic equity funds. The firm did, however, launch eight new funds last May, including an emerging markets fund.

I agree with the move, in part given the size and strength of the research staff at the company; I don’t think they will loose focus on what got them where they are today. My only concern is if they stray too far into the alternatives space. I have been worried for awhile about the proliferation of alternative funds at the retail level, mostly because I don’t feel that a lot of investors understand what they are investing in; this could lead to large outflows and hurt performance.

To quote from the article:  “After suffering $200 billion in net outflows over the past three years, the new rollouts make sense, says Andrew Klausner, founder and partner of AK Advisory Partners. Furthermore, he is not surprised that advisors would support the shift in strategy as long as the products deliver on performance.

“American Funds has had considerable outflows and quite a bit of negative press over the past couple of years, but advisors have a short memory, and if they want something they’re going to go to whoever can provide it,” Klausner says.

“I think the market is forcing them to look at other things,” Klausner says. Domestic equity “active management has taken a hit in the press and a lot of organizations have looked at ways to expand what they do,” he adds.”

Do you agree?