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Best Blogs of the Week

Posted by Anu Heda on Sep 17, 2012, in Best Blogs of the Week , tagged with , ,

Three posts this week that do not touch on QE3 since Mike addressed the topic nicely on Friday.

  • Columbia – Award for the best blog title of the week. I won’t give it away: post.
  • Putnam – This post provides a rare non-investing post. The author reminds FAs of difference succession planning options available to them. For any FA with entrepreneurial clients, this is a critical topic.
  • Russell – This post provides advisors with survey data about advisors and their opinions on global investing.

How Did Asset Managers Respond to QE3?

Posted by Mike McLaughlin on Sep 14, 2012, in Thoughts , tagged with , , , , , , , , ,

It’s almost old news by now. Yesterday, the Fed announced QE3 and ongoing purchases of mortgage-backed securities at the rate of $40B per month. So, how did asset managers respond?

Using Twitter as an (incomplete) proxy for firms’ responses, here’s the short, chronological list of activity as of 5pm on the day of the news:

That is six responses within about six hours. As a sidebar, it’s interesting that none of the content referenced any of trending conversations on Twitter (#QE3, #Fed, etc.). Per the screen capture below, a search showed Oppenheimer and Russell taking advantage of Twitter’s social features. But these were from before the Fed’s announcement.

I don’t know exactly what I expected when I started to look, but overall I’d characterize the volume as a bit disappointing. The biggest financial news of the week warranted a bigger, faster response. Firms know that; it’s still a matter of getting the process ironed out.

Relevant Challenges All Around – Even in a Coffee Shop

Posted by Anu Heda on Sep 12, 2012, in Thoughts , tagged with ,

A guy walks into my favorite Manhattan coffee shop and demands an iced espresso with hot milk poured directly into the plastic iced-beverage cup. The cashier, very politely, declines. She says they don’t make a drink like that. As an alternative he can have hot espresso poured into cold milk in a plastic cup.

He smirks and says something unpleasant to her. She asks the barista/manager to help. He comes over and tells him that the cup will melt a bit, also the milk will  taste terrible. “We won’t make that,” says the barista.

The patron goes on to throw an adult fit (you know the act – talking to all three baristas at once, saying things under his breath, etc.). Finally he drops the classic line: “why won’t you give the customer what he wants?”

Creating a sense of closure, the manager looks at him and says, “What you’re asking for isn’t safe and it is not a correctly made coffee.”

Observing this interaction made me think about what a customer “wants” versus what is “safe.” There’s a parallel for financial advisors here.

For advisors with a fiduciary duty, they can talk an insistent client down with the “this isn’t a safe investment for you.” But for the remaining advisors with only a suitability requirement, what do they do? It must be a tricky situation. Asset managers could assist.

Asset managers who survey investors could add this topic into the survey. From Natixis to Fidelity (just one of many instances), many asset managers survey investors frequently. Consider questions such as:

  • In the last year, have you been talked out of an investment idea? If yes, how so?
  • What do you look for in an advisor? Offering an “ability to talk me out of unnecessary risk” as an option.

Insights from these surveys help advisors during those discussions with examples and data they may not have access to.  Surveyed effectively, there may be areas to support this topic in the client on-boarding process. Topics like this are rarely covered but may be fertile ground to support online practice management modules and wholesaler support material.

One Idea at a Time

Posted by Anu Heda on Sep 11, 2012, in Thoughts

Mike and I completed our longest engagement last month. In the engagement, we supported developing a firm’s marketing strategy, including a new tagline. As we’ve helped many firms with this endeavor I thought to share one takeaway.

I recommend selecting a single important theme to use throughout a tagline and introductory materials (i.e., one pagers, Web site homepages, etc.). Instead of trying to include numerous topics, such as “global,” “long-term,” “innovative,” and “client-centric.” Select the single most important topic (From our experience, selecting criteria to select the most important topic is difficult in its own right.). The tagline and introduction will be sharper and more likely to stick in a prospect’s head. During secondary interactions (Web site, follow-up meetings, etc.) you can introduce additional themes. And not including the others will not mean your firm isn’t those things.

For instance, a hypothetical quant shop with 15 math and physics PhDs on the team may focus on data analysis. If a prospect leaves an in-person introduction, glances over a whitepaper, or scans a Web site and concludes those guys are serious about data analysis, then that is a much better outcome than concluding those guys are investment managers.