Author: Mike McLaughlin

Sales Compensation: Same as It Ever Was

Posted by Mike McLaughlin on Nov 10, 2011, in Thoughts , tagged with , ,

Last week I read a Tweet attributing the following to the head of a large mutual fund company:

Compensation structures have to change.

I also recently read a trade journal article about the challenges associated with sales compensation. It covered the usual bases:

  • “…firms still fall short when it comes to using pay to incentivize wholesalers to focus on certain activities.”
  • “We are looking for individuals who are aligned with the business goals of the organization.”

Here’s how I see it:

Why? Because of how little the comp conversation has changed over the years. For all the supposed “strategic” conversation around paying salespeople, the last decade has shown comp to simply be an operational tool requiring ongoing tactical adjustments.

The quotes above mirror discussions dating back more than ten years. A quick search on Ignites yielded the following:

  • 2010: “…pay models are in flux as firms struggle to offer compensation that can attract and retain key talent but also stand up to bottom-line realities…”
  • 2009: “…more companies should consider strategies that align compensation with the overall profitability of the firm.”
  • 2006: “…companies are increasingly considering [profitability] when calculating pay packages in order to more closely align wholesalers’ objectives with their own.”
  • 2001: “…fund firms should look at bringing wholesaler compensation in line with the firm’s profit model.”

I’m not saying that pay isn’t important – it certainly gets a huge amount of airtime and consideration at our clients. But for now it is not an area that is ripe for innovation. Instead, firms will continue the cycle of making moderate modifications to try and find the right incentives, the right level of complexity, and the right targets.

Why Don’t More Firms Care About Mobile Sites?

Posted by Mike McLaughlin on Nov 03, 2011, in Thoughts , tagged with , ,

Last week we presented at the MFEA Council meetings in Chicago. The topic: mobile strategies.

We covered a lot of ground in our presentation – device and mobile Web usage trends, sites vs. apps, client-facing tools, mobile efforts to support field personnel – which we’re more than happy to share if you drop us a line.

The subsequent roundtable conversation covered a lot of ground as well. To my surprise, though, one topic got very little airtime as firms shared strategies with one another: mobile Web sites.

A fund profile on American Century's mobile site.

Back in 2010, Dalbar noted that 24% of asset managers have a mobile Web site. Current estimates lie in the 25-35% range, so there hasn’t been a big move. Why the lack of interest? I see three themes:

  • Mobile Sites are Boring: iPads and apps are sexy. A mobile site, on the other hand is purposefully designed to be a simplified, streamlined experience (single column, limited graphics/multimedia) that delivers the basics (product info, commentary, etc.). There’s not as much room to innovate, so firms see the sites as a snoozer.
  • There are Bigger Fish to Fry: Right now mobile-generated Web usage comprises 7% of all Web traffic. Some firms see that as a big number, some see it as small (especially intermediary/institutional managers). So, when it comes to budgeting, a mobile-optimized site simply misses the cut.
  • There’s Hope for Convergence: 6,500 different mobile devices exist. The Android, Apple, and BlackBerry operating systems all maintain significant market share (20%+). The marketplace is fragmented. But as more people get smartphones and tablets with ever-faster connections, some firms hope that, eventually, most bases will be covered with a single site.

But each of these lines of thinking is flawed. While less sexy than apps, mobile sites currently have the greater potential to reach clients and prospects (no buying a tablet and then searching the app store). The mobile share of Web traffic is only going to increase. And the hoped-for convergence of operating systems and devices is not going to come nearly fast enough.

Bottom line: more firms are simply going to have to bite the bullet here and implement an effective mobile site.

A Picture is Worth 978 Words

Posted by Mike McLaughlin on Oct 14, 2011, in Thoughts , tagged with , ,

Two weeks ago we did a presentation for a client on infographics – what they are, how they can be used, the process for creating them, and some strong examples from asset management. With that discussion fresh in my mind, I read Richard Thaler’s article from last Saturday’s New York Times.

Thaler, whose work I really admire, writes about how the government, companies, and individuals are paralyzed by the current financial climate and holding off on investments they should make now. In other words, those that control the purse strings have become proverbial deer-in-the-headlights.

It’s a solid argument, and Thaler takes 978 words to make it. As I finished the article, I immediately thought of an interactive infographic from John Hancock Funds’ Web site.

This shows the beauty of even a simple infographic. Though Hancock’s message differs from Thaler’s – the focus is on people’s willingness to invest in securities based on recent market performance – they tell a similar story with a visual and 10% of the word count.

The natural communication approach for most asset managers involves charts and tables surrounded by paragraphs of text. This example shows that better options are out there.

Vanguard Making Use of Old Content

Posted by Mike McLaughlin on Oct 12, 2011, in Thoughts , tagged with , , ,

This is outstanding:

Vanguard references an article it first published in 2009.

The reason? Vanguard re-used a solid piece of content it initially produced almost two years ago.

In the constant battle to create more and more new content, firms too often forget that they’ve produced tons of great material in the past. Most of it is buried, never to see the light of day. Often this is because firms simply don’t have good organizational memory on what they’ve previously created.

But there is definitely ongoing value in certain less-than-new pieces. It’s good for clients and easy for the firm. Nice job here by Vanguard.

Alternative Products and the Importance of a Hook

Posted by Mike McLaughlin on Oct 11, 2011, in Thoughts , tagged with ,

Take a look at the overview of alternative funds from AQR:

Then, go one step further and look at the initial presentation of the investment approach for the Managed Futures Strategy Fund:

We all know marketing alternative vehicles is difficult. The diversity of strategies, and the still-limited knowledge of many advisors and investors will continue to be significant roadblocks.

But the AQR example also highlights an important issue: initial presentations of alternative vehicles often lack a hook. There is no element that specifically calls out why I should delve into the complexities of this fund.

I don’t really watch a lot of cooking shows, but I’ve seen enough to know that the show almost always begins with a preview of the fully-prepared dish. That’s the hook. That’s why you’ll stick around for 30 minutes and invest your time in the details of the ingredients and process.

People’s lack of familiarity with alts means they’ll need to invest extra time to understand them. This reality gives elevated importance to the initial hook, and alternative providers need to focus more on putting their best foot forward.