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Measuring Twitter Velocity

Posted by Anu Heda on Sep 15, 2016, in Thoughts , tagged with Twitter

An additional way to examine industry Twitter usage is through a velocity test. To measure velocity, I examined the number of days firms need to post 20 tweets (unique content, not retweets or likes). I did this in September of 2015 and again last month. I found one point very interesting: in a small sample, there are not easily identifiable trends associated to specific firms (i.e., firm X always tweets the most).

Additionally, the sort rank for velocity changed dramatically. In 2015, BlackRock (3 days), PIMCO (4), and UBS (4) required the fewest days while AB (34) required the most. In 2016, PIMCO (3) increased velocity by 1 day, while the next two firms Goldman Sachs (5) and Natixis (7) stayed in similar velocity. The remaining firms slowed down a bit. The slowest 2016 firm, Voya (27), needed considerably less time than AB in 2015.

As social media adoption and usage evolves through its nascent stages for the asset management industry, I’d wager that a velocity test each month would result in differing sort ranks each time.

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 ]}

Best Blogs of the Week #245

Posted by Anu Heda on Sep 12, 2016, in Best Blogs of the Week , tagged with TIAA

Only one post this week and it covers fiduciary responsibility. “D-O-L,” as our clients refer to the fiduciary responsibility for financial advisors, looms large throughout the industry. The rule is extremely complex and deserves high-quality posts such as this one.

TIAA – Fiduciary Rule’s “Recommendation”: What’s an Advisor to Do? – So if a statement puts an advisor on the recommendation side of the line such that the advisor becomes a fiduciary, what does that entail?