Thoughts

Twitter by the Numbers

Posted by Anu Heda on Sep 12, 2016, in Thoughts , tagged with MFS, PIMCO, social media, Twitter

In 2016, there are very few, nearing zero, asset managers without a Twitter account. We follow over 100 asset managers and similar to most users we scan through their tweets at idle moments and occasionally click-through to interesting topics. Given the prevalence and long-standing presence (7+ years in some cases) of Twitter across the industry, a basic question comes to mind: are firms gaining larger Twitter followings? I’ve studied a small set of firms over the last year and arrived at three takeaways. But first, the data.

For instance, MFS increased daily tweets by 80% and saw a 66% positive change in followers.

Takeaways from this analysis:

Nobody has fewer followers than last year, supporting the notion that Twitter (and perhaps all social media tools) has become more valuable for asset managers. Even the three firms that tweet less than they did a year ago have increased followership.
The industry has not settled on a “normal” amount of activity. Different firms are experimenting with volume ranging from every other day (Deutsche Asset and Wealth Management at 0.6 tweets per day) to every four hours (PIMCO at 6.3).
In this 13-firm sample, there’s weak correlation between increased activity (via daily tweets) and increased followership. We have no clustering around the trend line.

Note: PIMCO was excluded from the chart for scaling purposes. PIMCO increased Twitter activity by 1,475% and experienced 12% growth in followers.

Examining Industry Web Site Log-In and Registration

Posted by Anu Heda on Sep 12, 2016, in Thoughts , tagged with American Funds, Eaton Vance, Franklin Templeton, Legg Mason, TIAA, Web sites

We’re frequently asked for an opinion on financial advisor site authentication. In turn, we often ask if any content absolutely requires a log-in. FAs do not like to register and maintain an additional ID/Password, so securing as little content as possible is a sound initial mindset.

Yet, we understand that broker-dealer only materials require authentication. So what are today’s industry log-in and registration options? I examined how 19 firms enable advisors access to secure content and found two interesting conclusions.

Log-In / Authentication

Of the 19 firms, 8 firms try to authenticate the FA through an e-mail match against the firm’s CRM. Eaton Vance showcases that approach; when the FA tries to access secure content, eatonvance.com asks only for an e-mail address (see below). So an advisor with an e-mail already captured in the CRM does not need to register. That means 12 of the remaining firms make log-in harder than necessary for known FAs to access the content they want.

Matching first against CRM will become status quo and firms without that capability are digital laggards.

FA Registration

Firms present registration in one of two forms:

6 of 19 firms require a clear affiliation with a broker-dealer, either through a CRD number, dealer number (via Franklin Templeton), or valid broker-dealer e-mail address (via Legg Mason). This is typically a short form registration requiring only 4 or 5 data fields.
The 13 remaining firms present a single or multi-step process (via TIAA) that requests typical online registration information with 10 or more data fields, but without a CRD or Dealer number.

In parallel to these two registration approaches, 4 of the 19 firms also allow FAs to bypass on-site registration via social sign up. All four authenticate via LinkedIn and two also allow authentication via Facebook and Google. Royce (example) uses the LinkedIn approach with an “authorize” window popping up for user acknowledgement.

An abbreviated registration form with a required CRD or Dealer number is more straightforward than long-format registration.

A To-Do List for Marketing Smart Beta

Posted by Mike McLaughlin on Sep 12, 2016, in Thoughts , tagged with BlackRock, ETFs, Invesco, smart beta

Sound familiar?

A new category of investment products emerges as an attractive alternative to long-established strategies
Asset managers flood the market with product to appeal to the retail (advisor/investor) market
AUM takes off, with highly-optimistic long-term growth projections

Five years ago this was the storyline for liquid alts. And while the story is far from complete and optimism remains in pockets, the last few years have taken some air out of this high-flying balloon.

^{Source: Financial Times}

The path of liquid alts comes to mind based on the explosion of attention, products, and assets in smart beta. An ETF.com survey showed that 99% of advisors expected to maintain or increase smart beta usage in 2016, and BlackRock recently projected smart beta AUM to nearly quadruple by 2020.

The industry has gotten off to a strong start in marketing smart beta to retail audiences. Education is a central element, and firms have made good progress:

Establishing ‘smart beta’ as a baseline term, then using proprietary terminology to support proprietary offerings
Utilizing similar nomenclature and definitions for key factors (e.g., value, momentum, low volatility, etc.)
Differentiating smart beta strategies in general from traditional active and passive

Of course there is a long way to go with marketing just one of the myriad factors that will impact the long-run success of the category. So what areas represent the next opportunities for improving the retail marketing of smart beta? I see three:

1. Providing Market Context

Once the definition of the underlying components of smart beta are understood, the next step lies in helping advisors and investors understand the context surrounding factor performance. This is an important topic in part because of how the outcomes associated with individual factors vary over time (i.e., market conditions).

^{Source: Invesco PowerShares}

Much in the way we’ve seen asset managers map mutual funds to investor needs and desired outcomes, firms can begin to provide similar context on different factors and factor combinations (and therefore strategies). Even something as high-level as this table from BlackRock gives an advisor or investor a valuable anchor as they learn about smart beta.

^{Source: BlackRock}

The need for context relates directly to the next messaging opportunity – implementation.

2. Addressing Implementation

Where some progress has been made in putting context around the different approaches to smart beta, firms have been less successful in communicating how smart beta should be integrated into existing portfolios (which is actually something often done well on the institutional side). With liquid alts, most firms started with a simple message that referenced:

Improving diversification (via assets not correlated with traditional stocks and bonds)
Targeting a specific (and modest) allocation

A straightforward analog with smart beta is largely missing, and some of the concepts used today are likely too complex for much of the retail market.

^{Source: BlackRock}

Crafting a digestible, clear message on how to apply smart beta will help firms capitalize on the current wave of interest and assets.

3. Clarifying the Brand

I’ve touched on this before so won’t dwell on it here. And while it obviously doesn’t apply to every firm, the many established firms that have recently entered the ETF and smart beta space face a unique challenge in merging this effort with longstanding brand messaging.

As the lines between passive and active investing continue to blur, there’s an opportunity, or more frankly a need, for individual firms to recast how they want to position themselves in the minds of clients. Branding is a long-run consideration, but one that several firms have largely neglected (or deferred) so far.

^{[ banner image via Stephen Dann ]}

What NBC (Olympics Coverage) Can Learn From Asset Managers?

Posted by Anu Heda on Aug 23, 2016, in Thoughts , tagged with Lord Abbett, Web sites

The Rio 2016 Olympics captivated my family from the opening night to the closing ceremonies. We cheered Team USA from our little corner of Brooklyn whenever possible; that’s usually after dinner. From relishing the Team USA soccer victory over France to lamenting Mara Abbot’s cruel loss cycling (my 11-year old actually began crying), we took in more than our fair share. But it’s been a struggle in some ways.

I know NBC is streaming everything and that works pretty well (though the west coast – east coast tape delay issue seems so odd to me). My biggest complaint is an inability to see a schedule per sport, per nation. This use case seems so straightforward I’ve started questioning my frame of reference. Aren’t others frustrated? For instance, my son has some interest in rugby (presumably from Cal’s annually dominant performance each May). So on day 1, I went to NBCOlympics.com looking to answer when will Team USA men’s rugby play? In my mind, this is akin to where is your mid-cap growth fund’s fact sheet? It’s a typical use case in the asset management industry. Persevering for a few minutes, I found a way, through the Rugby feed to TV listings, but that requires scrolling through days and days of matches to find Team USA’s 3 preliminary matches.

When I visit the Lord Abbett home page (click image below), I’m immediately greeted with “Documents & Forms” to the right-hand side. Two clicks later, I’m downloading that fact sheet. Why can’t I have that experience for the Olympics? Is NBCOlympics.com designed for the Millennial consumer, not a Gen X dad?

Pitch Books: 3 Dos, 3 Don’ts, and 1 Maybe

Posted by Mike McLaughlin on Aug 08, 2016, in Thoughts , tagged with materials, pitch books

Few things cause more angst among institutional marketing teams than pitch books. At many of our clients there’s an ongoing, fluid dialogue focused on key execution issues:

What information is most critical?
What’s the right level of detail?
How should we structure the story?
Should we present multiple, related capabilities?
How much modification and customization should we allow on a case-by-case basis?

Several recent projects immersed us in a pitch book wonderland. So with that in mind I thought to share a few quick takeaways on what works and what doesn’t.

3 Things to Do

Include Case Studies: Roughly half of the pitch books we’ve analyzed contain a case study. When done well, these bring the investment process – which is among the least-differentiated content in a typical deck – to life by showcasing both the team and the specific way in which they operate.

Provide Context: A rare component across pitch books is broader macroeconomic or market context surrounding a strategy, which I see as a miss. Though it may not always be needed, including the bigger picture around a capability establishes its relevance, generates more buy-in for discussing its specifics, and communicates the firm’s overall expertise.

Reference Peer Data: A second infrequent element within the prototypical pitch book is peer data. As with macro / market context, incorporating how the strategy has performed and how key characteristics and risk measures match up with competitive offerings is an invaluable way to thoroughly educate a prospect.

3 Things to Avoid

A Process Funnel: As I referenced above, I think the investment process is often among the least compelling facets of the average pitch book. Nothing hammers that home more than the generic three or four-step funnel. Any presentation besides that is an upgrade.

Mammoth Team Slides: Do you have 85 fixed income PMs and analysts spread across 12 global offices? Fantastic. But nobody wants to see the entire org chart with names, titles, certifications, and other details. An overview of your organization is fine, but when it comes to team specifics focus on the core people that make the strategy go.

Opportunistic Performance Presentation: Occasionally firms will insert an outlier performance chart; something like rolling 3-month performance over a non-standard time period. I think this can hurt more than it helps, as unexpected presentations bring out skepticism (i.e., “why are you showing me this?”).

1 Thing I’m Unsure About: Reference Retail Success?

Some firms cite retail-oriented elements of a given strategy within a pitch book: AUM in the corresponding mutual fund, Morningstar ratings and other awards received by the fund, etc.

Most institutional marketers blanch at this retail infiltration, but I’m not so sure it’s a bad thing. I understand the concern of looking like a retail firm, but I also think it gives relevant and concise support to the overall message. Noting that the mutual fund has a 5-star rating, for example, will be quickly digested as a positive signal on the strategy overall by the average institutional investor.

I don’t feel strongly enough to say this is a definite “Do”, but I am confident that it’s not a definite “Don’t”.