Category Archives: Retirement

Marketing in the Coronavirus Crisis: Notes from a Discussion at the Boston Meeting of the Gramercy Institute

Just before everything shut down in the face of the pandeminc, a group of financial marketers convened in Boston for a meeting of the Gramercy Institute. The session was billed as focusing on the topic of ”What’s New and What’s Next in Financial Marketing“ and indeed much of the content touched on the future, but, taking a cue from the news at the time, the host initiated a discussion of marketing in a crisis.

Broadly, the conversation fell into two buckets: communication “best practices” and the role of marketing. Two key take-aways:

  • Communication “best practices.” There was agreement that transparency and authenticity were key to building connections with customers, but also that there was no clear playbook for communication frequency and channel. Discussion participants recognized the need to respect the limited time and frayed nerves of customers but also saw potential value in providing clear guidance in an environment filled with uncertainty. Likewise, they recognized the need to find a balance between communication overload – exacerbated by the worldwide turn to digital communications in light of severe restrictions on face-to-face contact – and the value of demonstrating presence and building community when so much of the current crisis feels (and is) isolating. Finally, participants expressed mixed feelings about finding opportunities in the crisis. Many said that this was definitely not the right time to be promoting products. Some made the argument that people are looking for concrete assistance and that there was a place for tasteful promotion of solutions that could meet the needs of customers in the current environment.
  • Role of marketing. As the discussion turned to the role of marketing amidst the crisis, there was widespread consensus that in some ways the environment was one in which marketing could really prove its value in building relationships with customers and prospects and in delivering timely, conscientious, clear communications. Even more, though, there was agreement that marketers at B2B financial services companies should seize on this as a chance to forge a closer partnership with their sales colleagues, who are likely to be struggling to adjust to a world in which face-to-face contact is minimized or even completely foregone. Everyone agreed that if Marketing could find a way to enable sales to leverage digital and voice channels to nurture relationships at a distance and at scale, it would have a significant impact on the ability of the company to navigate these difficult times.

While the event was likely the last in-person meeting for the near future for most in attendance, it was a valuable opportunity to share ideas with colleagues and learn from each other as chaos seemed to be descending. It has given us much to think about as we all now hunker down, socially isolate to try to stay safe, and think about what the future might hold in store.

Integrating Human and Machine Advice: Current State and Future Requirements

Several recent articles and pieces of news pertinent to robos and advisors create an interesting mosaic of the current state of human and machine advice:

The image created by these items depicts the struggles in the advisory business to settle on a clear, promising strategy for integrating advice channels.

The Limits of Disruption

When robos appeared on the scene several years ago, they were heralded as the future of wealth management, a democratizing blow for the industry, and a mortal assault on traditional financial advice. Any who have seen the hype machine movie before won’t be surprised that none of those things turned out to be true. In the real world, the biggest “robos” in terms of assets are those of Vanguard and Schwab that operate as hybrids while the “pure play” B2C robos have struggled to accumulate assets and breakeven on customer acquisition costs.

The reason for this discrepancy between reality and hype is simple: Irrational as it may sometimes be, most people want humans involved in their financial planning. A 2016 survey conducted by EMI and Boston Research Technologies showed not only that most want human involvement, but also that those who were more open to algorithm-driven investing didn’t neatly map to pre-conceived demographic categories. The bottom line is that you can’t will customers and prospects into following your vision for a service offering. Moreover, making assumptions about their behavior based on intuition and truism doesn’t create a strong foundation for success.

Changing Perspectives

The truth is that the majority of customers want a hybrid model. Many of the leading wealth managers understand this and have implemented or will implement various forms of hybrid offerings. In fact, as I mentioned earlier, the largest robos are actually those launched by existing wealth managers Vanguard and Schwab.

But any business heading down the hybrid path needs to recognize that their old models of and assumptions about client management and messaging will likely need to change. Specifically:

  • If portfolio management is outsourced to machines, it becomes a commodity and value must be defined in terms of relationships and communication—an idea that has been around for some time but which has not gained universal acceptance because it is hard to execute.
  • If you are advocating for clients to use your automated platform, you need to recognize that you are now responsible for their adoption of and satisfaction with the investment management software. Firms and their advisors need to be ready to assist clients onboard, answer their questions, and help them realize the full value of the software.
  • Pushing the wrong clients towards a robo solution is a lose-lose situation that will cost time and assets. Firms and their advisors need to have ways of identifying where clients are likely to fall on the spectrum of interest in and comfort with automated portfolio management, recognizing that age and net worth will likely not be great proxies.

Notes from InVest 2017: From Fear of Robos to Hybrid Optimization

When you attend a conference that has a particular thematic focus two years in a row, you have the opportunity to observe the progression of the discussion. InVest 2017, following on the inaugural InVest 2016, very much offered this opportunity.

From my perspective, 2016 was about the retirement advice industry coming to terms with digital advice and moving from seeing human and digital advice channels as competitors to seeing them as complementary. By the 2017 conference, the attendees had come to recognize and understand the necessity of a hybrid model and now were focused on how to manage and optimize that hybrid structure. Two discussion panels exemplified the new focus:

The Empire Strikes Back had a panel of senior executives from large financial services companies (Citi, UBS, Bank of America/Merrill Lynch, and JP Morgan). They all talked about the need to start from a place of understanding the business opportunity offered by digital—an improved client experience, increased efficiency, cross-selling—and to use that understanding to shape digital advice strategy. Throughout the session, the panelists repeatedly highlighted both the opportunity and risks that face big advice providers. The opportunity is to leverage technology to enhance and build new relationships; the risk is that existing clients could be turned off. Specific comments from the panelists illustrate these dynamics:

  • “The industry is moving from product distribution to client relationship management and digital is a big part of that new delivery model.” (Venu Krishnamurthy, Head of Citigold, Citipriority, Citi Personal Wealth Management)
  • “We learned that we couldn’t just rely on our industry experience to deliver a strong digital experience; UI matters a lot.” (Richard Steinmeier, Head of Emerging Affluent and The Wealth Advice Center, UBS Wealth Management Americas)
  • “Clients don’t just use us for one thing, so we have to think about digital advice in the context of overall relationship and be aware of how everything fits together.” (Kelli Keough, Global Head of Digital Wealth Management, JPMorgan Chase)
  • “You have to look at decisions about digital implementations on the basis of the value to client relationships.” (Aron Levine, Head of Consumer Banking and Merrill Edge, Bank of America)

In the Hybrid Strategy IRL (“in real life”) session, panelists from the front lines of client advice talked about how the foundation of the hybrid structure has to be the client and that technology should support, not hinder, the necessary and valued human interactions. In their words:

  • “You have to know who your clients are and how the technology will help you manage and deliver value in their eyes.” (Ryan Parker, CEO, Edelman Financial Services)
  • “Technology should be used to help advisors have better conversations, and to help deliver better outcomes. The guiding questions should be: “What can you automate?”, “What can you augment human with?”, “How do you segment?” (Ben Jones, Managing Director – Intermediary Distribution, BMO Global Asset Management)
  • “Don’t make the mistake of falling in love with the technology” because “our product is our experience…the rest is pipes and plumbing.” (Parker)
  • “Always go back to question: how does it help the client experience?” (Paul Duval, President, Genesis Wealth Advisors)
  • “Technology is empowering. [Clients value our ability] to have tough conversations. The more efficiently we can get “housekeeping” done, the more time we have for those conversations.” (Duval)

As this year’s InVest approaches it will be interesting to see the current state of thinking about the hybrid model, and how far down the road of grappling with the strategic and operational challenges that will likely come with implementing the model companies have come.