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Advertising to the Investor

Posted by Anu Heda on Oct 10, 2010, in Thoughts , tagged with , , , ,

Last weekend, I opened the Sunday paper and the typical coupons and advertisements fell out.  There was an unusual one – a full page, heavy-card stock advertisement for IAU.  IAU is BlackRock’s iShares ETF that tracks gold’s price.  I never received an ETF or Mutual Fund advertisement via the newspaper.  I asked Mike, my dad and a friend – to the best of our knowledge; nobody had.  Interesting – maybe revolutionary!

The IAU insert from the New York Times. Click to enlarge.

My initial reactions:

  • The ad is pretty clear.
  • The ad must be extremely expensive.
  • The “call-to-action” is pretty generic.

Clarity

The advertisement assumes the viewer is already interested in gold.  Then there are five different reasons to invest in IAU over other options.  From the advertisement, I think, maybe it’s time to invest in gold and maybe I should do that through an ETF.  I wonder if IAU is the best option. My thought process is the best BlackRock can hope for.  So, the message is very clear.

Cost

Is this expensive?  Expense is relative to value or return; so I can’t really say.  Yet, I wonder if BlackRock can measure this ad’s effectiveness.  For investors buying IAU via brokerage accounts, there’s no way for BlackRock to measure those sales.  Potentially, this advertisement is simply seen as an effort to elevate the firm’s brand and products to a more ‘top of mind’ status.  In that context, it’s hard to say if the ad is expensive.

Call-to-Action

The ad lists a telephone number and Web site.  I visited the Web site listed (www.ishares.com/gold).  I want a continuation of knowledge sharing, instead it’s a bit repetitive.  Initially, I see the same bullets; when I click “Learn More,” I’m immediately sent to the Fund Overview page.  This Call-to-Action isn’t strong enough.

I’m curious to what you think.  Good idea for industry leaders like BlackRock?  Does the idea scale down well to other firms?

Hybrid Wholesaling Evangelism Needs a Break

Posted by Mike McLaughlin on Oct 08, 2010, in Thoughts , tagged with

Cerulli Associates recently released a report on wholesaling, citing the following as a central finding:

Hybrid wholesalers average approximately 50% of the production of a traditional field-wholesaler for 40% of the cost, but work best as complementary resources.

A press release for the report indicated that these numbers make a compelling case for the integration of hybrids within sales teams.  To that I say:  maybe.

Consider the efficiency results cited by Cerulli.  Taking the data at face value – 50% production at 40% of the cost, on average – even moderate variability means firms have a reasonable probability of actually seeing reduced sales effectiveness. We’ve done a lot of this research in the past.  Sometimes hybrid wholesaling doesn’t pan out.

Sure, firms need to consider if, and how, to use the myriad sales role definitions that exist between a pure internal and a pure external.  There’s real opportunity there.  But there’s no need to evangelize hybrid strategies.  The discussion should be about the thoughtful and detailed analysis needed for firms to decide what approach is right for them.

Hybrid wholesaling has been around a long time.  And it’s not right for everyone.

Testing out Foursquare

Posted by Anu Heda on Oct 06, 2010, in Thoughts 
(Inspired by the WSJ Mossberg solution)

Over the last four months, I used foursquare on my Blackberry.  I thought to share my thoughts for anyone considering foursquare – personally or for business.

How it works?

foursquare enables people to “check-in” at different locations (mostly businesses), using the GPS in their smart phones.  In the “check-in” process, people can comment on the location with a “shout out.”  foursquare doles out points for visiting locations and as users accumulate points, foursquare gives out badges (e.g. explorer).  The person who visits a location most is dubbed its “mayor.”

Is it useful?

Yes, in two ways.

First, foursquare replaces Yelp or other Web sites that list user-generated reviews.  For example, I can come out of the subway in New York City, open foursquare and search for coffee.  The Blackberry application will list coffee locations and their respective distances from me.  That’s helpful.  It’s much faster than calling up the browser, navigating to Yelp, searching, sorting and reading.  The reviews seem of less quality than the major Web sites, but the access is fast.  It’s also faster than launching Google Maps and accessing reviews Google relates to specific locations.

Second, foursquare is a consumer-oriented marketer’s dream come true.  There’s a “specials nearby” button that provides micro-coupons to the smart phone.  That’s great.  I bought two-for-one strawberries at Whole Foods with a foursquare special.

I don’t really care about foursquare points, badges, or mayoral appointment (but a very socially competitive person may).

Can foursquare help my business?

I don’t envision foursquare selling mutual funds, annuities, or other investments, but insurance comes to mind.   For instance, Allstate could run foursquare specials that tie closely to the “Mayhem ” ad campaign.  Allstate could place a foursquare “special nearby” when users are near select agent offices, discounting for any qualified driver switching car insurance to Allstate.

Facing Headwinds, What Can Hedge Funds Do?

Posted by Mike McLaughlin on Oct 04, 2010, in Thoughts , tagged with

How hard is it going to be for small and midsize hedge funds to survive, much less thrive?  According to two recent news items, very hard.

If a fund is preparing to launch, in startup mode, or somewhere south of $500M, this is gloomy stuff.  What do small/midsize funds do in this environment?

One option, of course, is improving performance.  But everybody is working tirelessly at that.  And for those funds below their high-water marks, it can be a long road back to attracting investors (and collecting performance fees).

A second option is to invest heavily in distribution, specifically via third-party marketers or by increasing in-house staff.  Under the right circumstances this is appealing.  But most small funds either hesitate or are incapable of investing heavily here.

The last option is the one with the best risk/reward profile.  It’s professional branding and communications.

Most small funds spend on a logo and other rudimentary branding.  Fewer spend on designers to help with materials (pitch books, fact sheets).  And fewer still use professional copywriters to refine their messages.

As a result, most hedge funds miss the best opportunity they have to stand out.  The hook, the story, the “what makes you different and interesting” is critical.  Small and midsize funds need to consider an investment in professional communications for three reasons:

  • Developing communications is not a core competency.  Investment experts are not necessarily experts at telling their own stories, nor do they always understand what prospective investors value most.
  • Very few hedge funds do it.  There’s contrarian value in using a tool most ignore.
  • It’s affordable. One year’s worth of management fees on $1M in assets (or less) is a worthwhile price to pay to improve a fund’s chances of standing out.

There are many reasons why hedge funds fail to attract assets.  A common one is that the fund’s story simply isn’t working.  Given some of the dire projections for the industry, it’ll be interesting to see if more funds invest in their communications.

Aim for Simpler Value-Added Offerings

Posted by Mike McLaughlin on Sep 30, 2010, in Thoughts , tagged with , ,

For fund and insurance marketers funneling products through intermediaries, value-added programs present a classic “damned-if-you-do, damned-if-you-don’t” situation:

  • If You Do: Developing and deploying value-added offerings comes with a big expense and, unfortunately, frequently limited uptake.
  • If You Don’t: A lack of value-added offerings means a potential competitive disadvantage and the dangerous appearance of being less-than-committed to help advisors/producers.

So what do we do? Think smaller.

I think part of the problem is that the value-added aspirations of fund and insurance companies are too grandiose.  For example, we worked with a top financial advisor this summer:  15+ years of experience, $100M+ in AUM.  Among the things we did, the one that made him happiest was the reinvention of his client materials.

Take, for example, the previous one-page annual review summary (PDF) he used for a $5M+ client*:

Original review template. Click to view PDF.

Then consider the updated version (PDF) we provided*:

Updated review template. Click to view PDF.

The use of graphics and clean presentation clearly provides an improvement over the original version.  In short order we gave the advisor a template to use as part of the basis of important conversations with his 100+ clients.

Of course there are compliance challenges when it comes to client-ready materials.  Even so, many everyday challenges facing financial advisors and insurance producers require relatively simple, straightforward solutions.

So instead of devising a robust, complex program for segmenting client bases, why not focus on simple tools to support the annual review process or offer 5 concise ideas for developing a good introductory presentation?  Doing so gives solutions to very common problems.  More importantly, this approach fits with the nature of advisors and producers, who usually want quick-wins, not long conversations, from product providers.

The point is:  mutual fund and insurance companies can be much more successful with value-added offerings by thinking simple.

* Sample data used.  Naissance branding used in place of client branding.