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Social Compliance

Posted by Anu Heda on Feb 21, 2011, in Thoughts , tagged with , ,
“You say tomato, I say tomato … Let’s call the whole thing off.”
– Ira & George Gershwin (from Shall We Dance)

I heard that song recently.  The chorus reminded me of the conversation we often hear between Compliance & e-Business regarding social media within investment management.

Compliance says, “set up process to archive, show us that it works and then begin with social media.”
e-Business says, “let’s start a little bit, dabble, and then begin a compliance process as we know more.”

Our perspective is to be compliant-at-all-costs.  In 2011, there’s little appetite for being out of compliance and the potential damage that can place on a brand.  So then what?

Well, archiving and organizing social media use is becoming easier.  We see tremendous value in an archiving pilot  that tries out both a leading providers (such as Social Ware or Actiance) and internal processes.  While each pilot at each firm will have different considerations, the pilot’s will include these steps:

  1. Identify a pilot group
  2. Provision their network accounts with access to Facebook, Twitter, and LinkedIn
  3. With Compliance, develop a prescriptive set of compliant posts
  4. Have the pilot group communicate the compliant posts
  5. Test the ability to prevent, delete, or retrieve posts

With numerous software-as-a-service solutions, perhaps this is a good place to give a little (to get a little) and begin with an archiving system pilot, before the first post on your facebook wall.

Does Everyone Really Understand the Complexity of Index Investments?

Posted by Mike McLaughlin on Feb 18, 2011, in Thoughts , tagged with , , , , ,

Third in a series of posts on the sales and marketing implications of the ongoing debate between active and passive management.  Read the first and second posts.

Back the spring of 2009, David Swensen, who oversees Yale’s endowment, gave an interview about his investment principles.  A frequently-repeated quote from the interview is:

With all assets, I recommend that people invest in index funds because they’re transparent, understandable, and low-cost.

The word that jumps out to me is understandable.  I think most investors and financial advisors would reflexively agree that index vehicles are exactly that – a tribute to the way they have been described and marketed.

But there is a variable involved in index investing that makes me wonder if everyone understands index products as well as they believe they do:  the underlying indices.  We spent some time digging into a variety of investment indices, leading us to two conclusions:

  1. Indices are Complex: An index is an easy concept in the abstract, but not so in practice.  For example, to fully digest the methodology behind the creation/maintenance of MSCI indices, you’re going to need to read 119 pages of information.  And consider how different theories have emerged on how indices can be best constructed.

  2. Indices can be Volatile: The components of indices vary regularly, and sometimes significantly.  For example, almost 700 securities were added / removed from the MSCI Small Cap indices at the end of last year.  Even the US Large Cap 300 index had 5% turnover in November 2010.

In addition, index updates sometimes occur as infrequently as every six months.  2008 did a lot to remind everyone how much can change in six months.

In the marketing of investment vehicles, index investments are presented as the simplest, most straightforward option.  As Mr. Swensen stated, they’re understandable.  But as we talk with advisors, they typically get indices conceptually but not in great detail. Data like that presented above catches many by surprise.

For firms positioning themselves and their products against index investments, this represents a way for marketing and sales teams to potentially change the conversation.

A Naissance consultant walks into a bar…

Posted by Anu Heda on Feb 18, 2011, in Thoughts , tagged with

… and happens to sit next to an investment consultant and two institutional sales guys from a top-5 asset manager.

Well, that happened earlier this week.  I sat down for an exciting burger and overheard a great conversation that reinforced one critical lesson: listen, listen, and listen more.

The conversation began something like:

Consultant: I’m trying to place $200 MM this quarter and we’ve been overweight American Funds.

Sales pro: That’s interesting.  Tell me how you got to be overweight American Funds and why that’s an issue.

The consultant then described his and his firm’s process and some history of investment selections.  The salesperson did an amazing thing there.  While 9 out of 10 folks would have launched into pitching their own funds, he was able to get the consultant to speak at length about process, management and history without asking for those things explicitly.  He ascertained additional information to further refine his pitch.

Listening is one of the most-talked-about, least-practiced skills. This was a great case study.

Sales & the blog

Posted by Anu Heda on Feb 08, 2011, in Thoughts , tagged with

Earlier this week, we tweeted a well written piece on sales people and blogs.   The author argues that sales people should not be forced to blog professionally. He gives a few reasons, two strong ones include:

  • Blogging is effective for reaching a large audience with the same message; perfect for the Marketing team.
  • Sales people can use the time more efficiently – either focusing on specifics with clients or listening for needs via social media.

By and large, we agree.

In numerous organizations we’ve seen, sales people already feel (perception being reality) there are too many non-client obligations.  Adding a required blog post periodically adds to that perception and is unlikely to drive flows and client loyalty.

What to Learn from a Super Bowl Ad

Posted by Anu Heda on Feb 07, 2011, in Thoughts , tagged with , ,

It’s a blogger’s right, no, mandate, to offer a perspective on Super Bowl Monday.

And like millions of other blogs today (I don’t really know if it is millions, or just feels that way), we’re commenting on the advertisements.  Or one advertisement.

The “Imported from Detroit” ad for the Chrysler 200 was fantastic.  The car was the top search on Google last night and the commercial had 800,000 YouTube views by 10am today.  Obviously, the commercial was compelling.

We were struck by the inspiring and emotional message for a down-and-out company in a down-and-out city.  It would be difficult (and potentially hazardous) to employ that strategy within financial services. There is one takeaway for our industry.  Communicate about the people (in this case the city and employees, not customers), not the products. That’s strong because financial products don’t exist for their own sake, but to solve problems and serve people.