How can wealth management firms use LinkedIn to attract retirement assets?

How can wealth management firms use LinkedIn to attract retirement assets?

I recently switched jobs and called my financial institution to inquire about moving over the 401(k) I had with my old employer.  This experience led me to consider, “Could wealth managers comb LinkedIn or other sites for indications that a client has recently switched jobs?”  While it is definitely not efficient to study LinkedIn for an hour each day, a computer program or app could be developed to track this information.

A wealth management firm could build a computer program to track current clients’ career moves. The wealth management company would need a LinkedIn page, which most companies already have, and permission from clients to access their data.  A computer program could be designed to store clients’ current job information and alert the wealth management firm of job changes.  While some customers may be reluctant to give permission (opt-out), other customers may appreciate the fact that their financial institution will proactively reach out to them to touch-base after a career move (opt-in).  Many clients are too busy to contact their financial advisor in a timely manner. 

When dealing with client’s financials, it is best if advisors tread cautiously so as not to be viewed as “creepy”.  When reaching out to clients, the advisor should initiate conversation with a more generic offer or say they are simply “checking in”, rather than call with an obvious goal of moving over retirement assets.

Another option to attract clients and prospects would be to create an app with utility or appeal (think Yahoo finance or a competitive portfolio management simulation app) and then require LinkedIn data to join.  Then wealth management firms could get career data on prospective clients too.  The company would have information on anyone who used the app.  In that case, maybe the wealth management firm should focus on a gaming app targeted toward people likely to be in high salary industries?

From a compliance perspective, the above solutions entail monitoring the activity inside an app or the activity of the wealth management firm’s LinkedIn page, which are both easier to track than if individual advisors were to attempt prospecting on LinkedIn. And, while some financial advisors at a wealth management firm may have close connections with some of their clients, it is probable that not every client of every FA informs or consults their FA about retiring or switching jobs. In that case, wealth management firms could explore one of the two options to ensure they do not miss the opportunity to attract the retirement assets of a client that spent a decade receiving a consistently high salary at their prior employer. Both solutions are a way for wealth management firms to get a larger share of the 4.7trillion 401(k) market.

How can financial institutions capitalize on viral marketing ?

How can financial institutions capitalize on viral marketing ?

Financial institutions are successfully using social media to promote their brands, but I am yet to see FS firms use viral marketing, a type of marketing that relies on consumers to spread information, often by social networks. Viral marketing is appealing because of the low cost distribution generated by individuals sharing information with one another.  However, it can be challenging to figure out what message will resonate with a target audience.

FS firms have dedicated social media teams to cultivate positive brand awareness.  Last spring, Morgan Stanley launched a program to spread the message that their work benefits society at large, not just their clients.  Twelve months since this program began, the Morgan Stanley brand has increased by 6%.

Persistent themes in social content disseminated by financial firms are: current events, innovation, charity, and nostalgia. Current events include the Olympics or #FriendshipDay, and let the customer know that the company is current and relevant today.  Twitter and LinkedIn are great forums to showcase new innovations in technology and by using social media, companies are inherently perceived as more tech savvy.  Financial firms, particularly incumbents, who may have received the brunt of the negative PR after the Great Recession, can casually mention their charitable efforts while still coming across as authentic.  Lastly, companies can create a warm and fuzzy spot in customer’s minds by making reference to a TV sitcom from yesteryears.

All of this is being done today, so what else can companies do? Viral marketing is a logical next step in a social media marketing strategy. Recently, I had several publications send me the same what-if scenario tool, which calculated the “true” cost of childcare when one parent chooses to temporarily or permanently leave the workforce. Given the upcoming elections in the United States and the fact that childcare costs are a topic of debate between the two candidates, the timing of the analysis tool contributed to its appeal.

It also got me thinking, “Wouldn’t it be cool if banks caught the attention of retail or mass affluent customers by way of viral marketing?” For example, if FS firms are trying to target millennials employed by start-ups, they could build a scenario analysis product that compared the value of a traditional stock option to the dollars sacrificed by taking stock instead of cash.  Or even a simpler mass-market tool, like one that showed how diversified a portfolio would be if a customer selected 12 stocks of their choice, would appeal to a generation consumed by gaming.  If the tool is initially shared with a select audience and proves to be likeable, it will hopefully gain traction and be spread from one individual to another. A share coming from a friend or via a publication that is credible in the eyes of the consumer is more authentic than social content shared directly from a FS firm.  The creation of authentic endorsements is the main benefit of viral marketing.

This idea of sharing a product for free via viral marketing entails a “freemium” pricing strategy, whereby a company offers an initial good or service for free in the hopes that a customer will be hooked and pay for additional products or services. In this case, a freemium tool spread by viral marketing may encourage customers to open a self-directed account. There does not seem to be much downside risk if these individuals would have otherwise kept their money in cash or gone to another self-directed platform or robo-advisory service.  The HNW/UHNW customers that would otherwise be paying for these what-if scenario tools would not feel slighted, because the full benefits to these tools are realized when they are used in conjunction with advice and with a holistic view of the customer’s assets and goals.

Finance meets fashion: #wearables in wealth management

Finance meets fashion: #wearables in wealth management
In my upcoming report, due out in the next several days, I take a look at wearable technology and the wealth management industry. What is wearable technology? Who are the possible users of wearable technology in the wealth management industry? What is the future for wearables in wealth management? Wearable technology is quickly gaining interest and momentum among consumers and enterprises. Wearables are digital devices that can be worn on the body (i.e., glasses, watches, cameras, clips), can be controlled with minimal manual input, and offer real time access to and the collection of data. This data can ultimately be used to influence real world decisions and behavior; wearables have the potential to alter the way we go about our daily lives. Wearables span multiple categories, including, but not limited to health, finance, and lifestyle. Achieving the “quantitative self” has never been easier. In this report, Celent will explore the role of wearables in wealth management and assess if wearables have the potential to move beyond the mass affluent and serve the HNW by, for example, integrating with an advisor’s CRM system.  Celent will provide an overview of the wearables market, examine the drivers for adoption, study the potential impact of wearables on the retail investor and wealth managers, and conclude with a prospective look on wearables in the wealth management industry.  

Retail investor trading in the US: perspectives on trading preferences and behaviors

Retail investor trading in the US: perspectives on trading preferences and behaviors
Celent conducted a survey of retail investors across the United States to better understand this segment of the wealth management industry. In this report, we answer:
  • What is the average profile of the retail investor in the US?
  • How have retail investors’ product preferences evolved over time?
  • How can firms capture and retain new and existing retail clients?
The aim of the report is to present a detailed picture of the online trading industry in the US from the perspective of the retail investor. Celent will conclude by stating its findings and making recommendations as to where wealth managers should potentially focus in the near term to capture retail investors. “The global financial markets, traditionally reserved for professional traders, are accessible to retail investors across all demographics and trading experience levels,” says Ashley Globerman, an analyst with Celent’s Wealth Management practice and coauthor of the report. “The profile and demands of retail investors, particularly those of self-directed investors, have evolved greatly over time.” The survey gauges their demographics, investing and trading behavior, product and service preferences, and technology adoption. The pool of survey participants ranges across all trading levels and demographics, such as age, gender, marital status, number of dependent children, and education and affluence levels. Some of the main findings of this survey are as follows:
  • The growth rate of self-directed investors continues to outpace that of non-self-directed investors.
  • Asset class preferences have changed slightly since Celent’s 2012 retail investor survey.
  • Dynamic client expectations continue to shape the wealth management industry.
  • There is investor demand for peripheral services outside of trading.
“As the wealth management industry and demands of retail investors continue to evolve, the importance of segmenting customers and adapting products and services based on their needs is increasingly critical in order for firms to remain competitive and gain broader market share,” says Isabella Fonseca, a research director with Celent’s Wealth Management practice and coauthor of the report.    

FinovateEurope 2015 – 2hat’s in it for wealth management?

FinovateEurope 2015 – 2hat’s in it for wealth management?
Last week Celent attended FinovateEurope 2015, great place to hear about new technologies and what companies will be launching in the upcoming months. While usually the main focus is banking, this year we saw a number of initiatives from a wealth management perspective.   1. Personal financial management and money management– lots of technologies to target the retail investors 2. Client onboarding — improving the process 3. CRM – creating value with data at your hands 4. Video graphics 5. Social media/mobile 6. Crowdfunding 7. Security — data privacy 8. Gamification – using games to attract younger generations to save and invest   In summary, vendors are putting their efforts on a number of areas, focusing on both the advisor and the retail investor. And it’s all about enhancing the customer experience. Very strong focus on CRM and financial planning. We are currently covering and will be covering many of the areas above. If you are a vendor that is interested in briefing us on their solution in any of the categories above and you are targeting the wealth management industry, please reach out to us!

Networks > social media

Networks > social media
I have never really liked the term social media. All media has the potential to be social. What is really changing financial markets is the power of networks. Networks can be highly social (Twitter, Linkedin) somewhat social (lets not forget Bloomberg or even a Squawk Box as a type of network) or even anti-social (private networks). Financial institutions and financial advisors should be looking for ways to leverage networks, not necessarily media. Content, services, insight, and advice can be delivered and shared among communities of users. I am sure this is a lonely fight, but we should drop the term social media. Rather, we should emphasize the importance and power of networks to change financial markets.

Celent Roundtable: Exploring Digital in Financial Services

Celent Roundtable: Exploring Digital in Financial Services
  If you get together a room full of bank and insurance executives and ask them to define the term ‘digital’, don’t be surprised if you get a lot of different answers. Some view digital in terms of devices, others think of delivery channels, a third group understands digital as a marketing tool. We surveyed the participants at our recent Digital Roundtable in New York and got all those definitions and more. What is incontestable is that digital, with its outsized impact on the customer experience, has become part and parcel of the front- or customer-facing end of the banking, investments and insurance businesses. Back-end processes that enable scale and automation, such as documentation and STP, are being lumped under the rather inglorious label of ‘e-business’. That raises the question: given that many customers are ahead of their financial institutions in terms of technology use and adoption, what are the requirements for a powerful customer experience? If digital is going to anchor the client-advisor relationship (or the financial institution to client relationship), what needs to be in place? One bank participant noted that digital offers must be ‘contextual’. An example of this might be mortgage offers prompted by a customer virtually touring a house for prospective purchase. Digital interactions become even more powerful when context is coupled with data.  Presenter Tsukasa Makino of Tokio Fire and Nichido Marine insurance showed how his company used data to market special policies, such as one-day car insurance, to non-car owners, as well as medical insurance offers linked to the physical activity levels captured in clients’ mobile devices. In the wealth management arena, evolving client characteristics are presenting new opportunities for remote servicing, including via video, chat and tablet. Time-starved and increasingly tech savvy clients, 20% of whom live more than 50 miles from their advisor, often prefer mobile delivery. In the same vein, firms need to step up efforts to develop real-time, device-neutral client reporting systems, while encouraging advisor use of social media for thought leadership and networking. Today, 98% of affluent investors choose not to use the same financial advisor as their parents, and social media is one of the first places they look for ideas and recommendations. It’s clear that the financial services industry has entered a new, more competitive era. From the mass market to the ultra-affluent, customers are increasingly collecting more data about themselves, and they are largely willing to share. Inspired by the example of non-financial firms such as Zappos, Amazon and the airlines, these customers are driving the most fundamental change in delivery that the industry has ever seen. They ask: As a flier, I can pull up real-time seat assignments on my phone; why can’t my bank let me do cool and convenient stuff, too?  

The next generation investor

The next generation investor
The “next generation investor” will leverage digital channels provided by brokerage firms to better enhance their user experience. These tech savvy investors are well educated and tend to be of high socio-economic status.  As the market evolves and investment needs continue to change, this group will rely on a new breed of interactive, data-driven tools to help them save time and generate new investment ideas. Online brokers have been leading the charge as early adopters in developing a digital strategy that delivers a more customized, end-user experience. Self-directed brokers and full service firms are increasingly looking to develop innovative technology solutions as a competitive differentiator. . So what are the key, user-focused functionalities the next generation investor is looking for in the online brokerage space? Technology For investors that utilize a brokerage firm for both banking and brokerage services, they will look to a single-sign-on authentication process and common User Interface to eliminate the hassle of multiple log-ins. The ability to view holdings and move money across multiple accounts, combined with traditional banking/brokerage app functionality (remote deposit capture, place trades, access news, etc.)  will create a more seamless end user experience. -For apps targeting the traditional investor segment: the ability to contact an advisor or representative directly through the app will save time. -For more advanced traders: adding FX and/or futures trading into one platform, more technical indicators, customizable/configurable layouts, streaming videos, and second-level details. -For all investors: increasing focus on new charting, usability enhancements. Tablet apps will also facilitate more configurability/custom layout tools. Large firms are continuing to focus on developing native apps to drive their mobile experience. However, smaller players are beginning to develop hybrid applications that support a wide array of devices and user interfaces.  The rise in custom applications that can adapt to various mobile devices will drive new business opportunities and capture additional market share for these players. Social Media Within the world of social media, there has been little change in the online brokerage space, but those firms that have remained active are continuing to attract new business  from retail investors. Some of the key functionality that will be attractive for the next generation investor will focus on: -The ability to engage with customer service representatives and traders within the community platform. -Building and developing more interactive functionalities such as sharing trades or trading ideas. -Offering new “sharing” or “community-like” features that can be available in private trading networks, including the ability to follow other investors, share charts, view top performers, and compare portfolio performance. -The ability to review and tailor individual portfolios and the ability to discuss  investment ideas in an online forum. -Crowd-investment – investors can view investment activity and communicate with peers in real-time.   In summary, the next generation investor will leverage  digital capabilities as an integral part of their relationship with and the services provide by their brokerage firm. On the other end of the spectrum, brokerage firms will look to integrate digital strategies with existing business service models, while continuing to provide innovative solutions that provide a more seamless user experience, differentiating themselves from competitors. This blog is also available on  http://www.scivantage.com/vantagepoint/

Social Trading

Social Trading
This blog post, an abstract of Celent’s research note to be released in Q1 2014, will focus on the topic of “social trading” in Europe and the US, which is a method of online, self-directed trading where users connect with each other in an online setting to share investment knowledge and copy each other’s trades. With the proliferation of the internet, social media, and affordability of smartphones, the way in which clients prefer to perform banking or trading activities is evolving. The continued enhancement and development of online trading platforms, mobile apps, social media presence, and social trading platforms are at the forefront of firms’ strategic plans. Social technologies are an integral part of our lives and social generations are driving companies to realign their business strategies. Financial firms have taken notice of this overwhelming trend and have incorporated digital strategies into their agenda. Social trading platforms are relatively young companies, many of which began as brokerage sites and evolved over the past several years into network-only sites.  Over the past several years, social trading has become increasingly popular, a reflection of shifting attitudes of retail investors across generations and throughout Europe in a post-financial crisis world. Like any other firm, social trading platforms face challenges to their international reach and business models, such as regulations, building trust among its users, and near-term limitations to the retail-only market. What is Social Trading? Social trading provides retail traders with access to the financial markets and other traders of varying levels of expertise. Social trading incorporates relatively expert-led guidance, while the investor still maintains control of investment decisions. Where Does Social Trading Take Place? Social trading is a global trend, but for the purposes of this report, Celent will focus on the European and US markets. Below is a sample list of conclusions that have been drawn based on Celent’s research in the social trading space:
  • New business opportunities are emerging due to client demands.
  • Technology continues to plays a substantial role in how businesses connect with tech-savvy clients in a cost controlled environment.
  • Transparency is still of foremost concern to investors and regulators.
  • Social trading negates information arbitrage that traditional banks and traders typically hold over their clients and industry players by allowing members to share local knowledge.
  • Regulations around social trading vary between Europe and the US.

Chat, Instant Messaging, Blogs and Trading

Chat, Instant Messaging, Blogs and Trading
This morning I read an article in my favorite financial (serious) paper about how the FX price manipulation scandal that is unfolding may make banks ban traders from using trading chat rooms. And that some were looking at ways to replace these trader conversations to bilateral phone conversations. I did check and today is not April fool’s day. Maybe I am out of my mind, could be, please do let me know if so, this is a blog, not a serious article. But in the meantime, please let me try to provide you with a little trading perspective here. Electronification is THE secular trend that trading is going through, I don’t see who and how one could stop this. Seriously, even when I write about fixed income trading, notably the most voice-traded assets in financial services, I have to write about electronification. Ok I did work for an exchange once upon a time, but I also did work for a notable dealer known for making heaps of money on voice trades. But even outside of trading, my retail banking colleagues keep writing about electronic transactions, handheld, cloud and the likes. And outside of finance, well guess who uses the internet to chat, talk, socialize, buy consumer goods, nearly everyone we all know. What would you say about banning teenagers from using facebook because they could meet dangerous people on it or expose their personal lifes unnecessarily? Sounds like a just cause but you can’t, facebook is here to stay, like linkedin is here to stay for us analysts, and like electronic chat groups for traders. A trader’s job is to make the best price for his bank/broker on an asset and reap a profit from it by buying and selling these assets. To make the best price for his banks he needs as much (relevant) information he can have to make his own mind/models like I need to read what my competitors and clients think to make my opinion on something, and so do traders. If you remove such multi-dealer chat rooms as Bloomberg’s, there will always be other chat rooms popping up like mushrooms, only this time they will be less legal than the ones traders use now, and they will really cause insider trading concerns. At least when a chat takes place on Bloomberg, the surveillance department of each trader’s bank could have access to the message exchange via Bloomberg and Orange’s Vault services. Etrali is another important player working with Bloomberg and Google Glass could well become a way to capture traders’ voice, chat, instant messages, etc. and put into the Vault too. This way the surveillance department can also look via key words in those message exchanges live, as they happen. Last time I asked a telco service provider if he was able to provide a reliable search facility through conversations taking place on the turrets (phones of the traders), they told me they could not because traders use strange words nobody outside of a trading floor understands and that conversations take place in an awkward sequence: 2 sec with someone and then 1min with someone else and then back to the first one, etc. But with a chat messages exchange then you see the historical trail visually, and yes, they surely use strange words but with time surely one can build a “trader dictionary” to translate these conversations in Oxford’s English and it surely would be easier to read the word written by the trader rather than having to read its transcript done by a none-trader inside a conversation with loud shouts from a trading floor in the background. Ok, I have waited a few hours before posting this to check with my editorial board if I was out of my mind, and they say they agree with me: next time a bank tries to make amends via such a press release, wait a few hours to give them such an outrageous headline please.