A Guide for Advisors Going Digital

In the future, asset managers of any size for all strategies should consider digital content distribution so that you, your firm, and your sales team can educate prospects and provide curated services to current and future customers.

Digital communication is the key to success for the next-gen independent asset managers.

As the world shifts from the desktop to digital platforms like apps, mobile web and OTT (aka the apps on your AppleTV or Roku device) I think that there are certain principles that can be applied to all strategies, regardless of if you’re in retail wealth management, family offices, REITs, hedge funds and private equity fund managers.

The model of success for new advisors is anything but proven or clear. Especially in 2018, where advisors have to compete with robo advisory firms like Robinhood and Wealthfront.

Consumers want personalized and curated content that is relevant to them. Their needs are constantly changing based on life’s needs. One day it’s finding a place to live and the next its inheriting a portfolio from a family member whose passed on. What they don’t want is to receive tons of email from poorly configured systems that ultimately end up in the spam box, or not read.
Advisors today are selling products that people don’t necessarily need, want, or are too complex to understand. Products like ETFs, Mutual Funds, Target Date Funds, REITs, and annuities all look the same when the charts are all up and to the right.

I think its important for investment professionals to change their mindset about their so called “intellectual property” because the truth is, is that there isn’t much differentiation between your broker ETF strategies and the Fidelity strategies…except those fees. I’ve always followed the strategy of “buying what you know” and while I understand that ETFs have a place in portfolio construction, our grandparents built wealth buying single name stocks.

Reaching new customers
As the world changes, people throw away those broker statements because they are verbose and difficult to understand. But to educate consumers in a digital world, asset managers need to start pushing the limits of what “the norm” is. There are a handful of independent asset managers already doing this to some extent. To follow is a list of ideas on how advisors could use modern platforms to transform their business from a service based company, to an agile, tech powered media startup.

Twitter is the best place for advisors and managers to communicate with the world. Think about it, the president is using the platform to communicate with the country, along with the news outlets who use the platform to publish links to their content. Politicians like Anthony Weiner, and executives like Elon Musk have seen their careers rise and fall on the platform.

Advisors can use the platform to share links to articles, thoughts on topics and participate in conversation with other people on the platform…suggestion, keep the politics and investment returns off the record. But no matter what your twitter strategy is, be sure that you’re genuine in the delivery and speak the truth….because you don’t want the SEC using that to investigate your firm…is anyone’s Funding Secured?

Sure Facebook has been in the news lately but is there a platform out there that has more users and could cause chaos amongst countries?

Asset Managers could use Facebook in a few of ways…some more traditional than others, but all focused on the customer and being everywhere they are.

Advisors could use the messenger platform as a service desk to communicate with customers. Need a copy of a report? 1 minute. Have a question about your account? No problem.

It’s fairly easy to build a process to remove the friction between your customers and your firm using humans, workflow tools, or even Chatbots…if the budget allows for it.

Beyond that, advisors could use the platform as another channel to acquire new business by using targeted ads to find your customer. For example, if you want to find doctors, lawyers, or business owners who like bowling and comedy and live in New Jersey, then Facebook is the place to be.

Traditionally, Facebook would be used as a publishing platform, similar to others, but with exponential reach. Think about it, you’re probably on facebook, your Mom probably uses it to look at pictures, your friends use it, their dad’s use it, and if you think their kids don’t use it, well, you will probably find them on Instagram…which facebook owns.

Instagram is an interesting platform because it is today’s modern magazine. There are some people who are CFPs with major followings who are paid to speak at events. Recently, like LinkedIn, Instagram introduced long-form videos.

When I think of this, I think of a show that I used to love, Wall Street Warriors.

It was so bad it was amazing, but basically, the show was the daily life at a hedge fund. Call it what you will, but a show about you firm might actually be quite entertaining.

The platform can run short form videos that are perfect for tips and simple strategies, 15 second ads, and now long form videos that can be used to deep dive topics that your target audience might be interested in.

However, the only way to know is to invest in the research and try using this to communicate your values and how you operate to the world.

Until recently, LinkedIn was the platform you’d use to find a new job. Now it’s becoming a platform for thought leaders to share and gain information to help grow their business or perform better at their job. About a year ago the company introduced Video and now LinkedIn is really a blue sky for those who are actively creating content and engaging with prospects.

Linkedin functions much in the same way as the Facebook platform. You can pay for ads to gain exposure but you don’t have to. Managers should be able to write about their processes — for example, an ETF with an active quant strategy — or record themselves talking about the strategy in a short or long form video.

To the layperson, this means absolutely nothing, but LinkedIn could be used to write an article about the topic and used to educate potential customers as to why they should consider this strategy in their retirement accounts. And all of this could be accomplished (to varying degrees) for the cost of the time it takes to write the article or shoot the video.

I grew up listening to the radio and bootlegging mixtapes. I watched MP3 players evolve in the iPod, then the iPhone and what I love about Podcasts is that they are the modern radio. Barry Ritholtz comes to mind as a pioneer in this space, followed by the likes of Ray Dalio, both who have been creating massive amounts of content. The best part is that you can listen to them anywhere, they can be long or short, you can talk to other people like a radio show, and best of all…you can do something else, like work, while listening to them.

For the price of free, you can share ideas about portfolio construction, stages of life, investing during those stages, and how to plan for life events….literally anything. These recordings can be distributed on iTunes, Soundcloud and Spotify, giving you access to millions of potential customers who you can interact with.

In fact, people can even request for you to answer their questions, on a platform like Quora.

I like Quora because it can be used to literally answer people’s questions, but also as a blogging platform. The site works like traditional Q & A where anyone can ask a question, and anyone else can answer it. People also have the option to request for your answer, so after someone listen to your podcast on diversifying their retirement account, they reach out to you to ask why. If people like your answer, they can give it an “Upvote”, which becomes the ranking system for the best answers to questions.

Just think, you can be the expert in the RIA space who can answer questions and share the information with others, because you care, and not because you need to sell 1,000 shares of same tactical trading enhanced beta mutual fund.

Servicing current customers
Supporting customers, and providing the best customer service will be a key differentiator between firms, and the fees that can be charged. People are willing to pay more for a service when they see the value.

When you have a problem with your freezer and need to call Sears, you’re put into a call center queue that gets routed to people. After 20 minutes, you might give up and call the local repair person because you know they will answer your call quickly. On the other hand, if you paid for an extended warranty, you will probably fight to get your money’s worth.

When my freezer broke I spent hours trying to get Sears out to fix it. When I told them about my warranty, the company basically put me at the end of the queue. I would have to book an appointment 3–4 weeks in advance, only for that date to come and go, when the repair person decided not to show up…And when I posted this experience on Twitter…I got a response within hours.
The point of this is to give you a good idea of what not to be. Perhaps if I could ask Alexa to book a Sears appointment, instead of having to rant on Twitter, Sears would be in a better position than they’re in today.

The ideas are endless when I think of using the Alexa platform for an asset manager. Though in its infancy, advisors can use the devices to share tips of the day, thoughts on the market, strategies on how to invest. It can go deeper and customers can subscribe to your app and then they can ask things like, what are my returns for the day?, or how much cash is in my investment account?

But as the platform matures and enters the business space, we can start to use Alexa to share information at scale. For example, when Mrs. Smith calls and has questions, you can ask Alexa for that information while you drive to your next meeting.

But before your shop can run by talking to it, you might want to consider documenting your processes and optimizing operations first.

Operating efficiently
Most independent advisory firms lack transparency and documentation. This makes the on-boarding process twice as long, but what’s more important is the fact that people on the sales team are being fired and/or given performance improvement plans as a result. When this happens, the company spent tens, if not hundreds of thousands of dollars in time, compensation, and benefits.

In my travels, advisors would receive requests from customers, enter them into a “ticketing” system, and that was it. In their eyes, their job was done, because it was outsourced. Unfortunately, this is an area where the ball gets dropped because the advisor is left in the dark to the status of request, and the customer may never get a response….and if they do, the person may not be able to answer additional questions, leading to further delays. More delays equals more frustration which will eventually lead to less customers.

If the turnover rate seems high, it might be a good idea to document each process as it relates to help people understand the business, how it operates, and give insights on how employees can leverage their teams to close new deals and service more accounts.

Integrating new technology
There is no shortage of apps and service providers that can be used an integrated into your business. If you’ve been in business for over 5 years, chances are that your data is scattered across the corporate network and with any number of custodians.

Advisory firms need a “middle-tier” that integrates record keeping systems, like CRMs, custodian banks, and trading application with content management systems, like Wordpress, Wagtail, or Adobe Experience Manager.

Content management systems can be used to bridge the gap between advisors, customers, and prospects. To date, wealth management firms use CMSs to share the least amount of information possible to make their digital presence available, but ultimately sharing little information, especially in the family office, private equity, and hedge fund space. 

Analyzing and synthesizing the Data
Most, if not all platforms provide detailed data that can be used make decisions. But before we can decide what to do with all of that data, why don’t you try creating it first?

Once you, or the compliance department, become comfortable with advisors representing the firm on their own accounts, with minimal supervision, then you can start to gains in traction based on the insights of these digital interactions.

And as advisors build name recognition for themselves and educate people on how your firm solves these problems, then you can reap the benefit of helping people in the long term as opposed to those selling products for the short term.