Thoughts

The Robots are Definitely Coming, But Slowly

Posted by Mike McLaughlin on Jun 06, 2016, in Thoughts , tagged with ,

A few months back a friend of mine sent me a link to The Robots are Coming for Wall Street, which focuses on how automation is taking over more and more tasks once handled by humans in the financial services industry. The story’s lead anecdote relays how software from Kensho is able to digest, analyze, and publish a report on the latest US employment report within minutes. Amazing.

Of course most everyone agrees on the trend and opportunity of automation. But in discussions with my friend it became clear that the two of us have different views on the pace of change. While he sees an aggressive dismantling of how many things are done today, I believe the landscape will shift more slowly, especially through the lens of the asset management industry.

As an example, in two recent client conversations the natural language software from Narrative Science has come up. One firm just deployed their software to write first drafts of investment commentary; another came close but postponed implementation.

But what’s been more interesting to me is the frequency with which industry marketers have never heard of the company. Though the company has been written up in the Wall Street Journal and Investment News as far back as 2013, there is seemingly no widespread buzz about them specifically or these types of capabilities in general. To illustrate, Ignites has mentioned Narrative Science just a single time in a January 2015 story (subscription).

Granted I am putting this through an anecdotal lens. Even so, I think more frequently than not transformational change takes a long time. Whether the topic is Big Data, sales comp, or automation, it will be years before the word “potential” is scrubbed from the conversation.

[ image credit: Sean Davis ]

Targeting (the Parents of) Millennials

Posted by Mike McLaughlin on May 18, 2016, in Thoughts , tagged with ,

I’ve argued in the past that the asset management industry is overrating the importance of Millennials. While Millennials rank among the most consistent topics of discussion in our work, a senior distribution executive at a client of ours recently framed the issue of engaging them as concisely and, even better, humorously, as anyone I’ve heard.

In talking about the potential value of addressing Millennials, he said:

You know who firms like us need to focus on? Me! I’m 51 and it’s me and my generation who are going to be inheriting wealth. I haven’t inherited anything yet. Forget about my 20-something kids, I’m the target!

We can cite research that the bulk of the wealth transfer to Millennials is more than 15 years away from starting, or that the transfer will be highly concentrated among just a small percentage of that generation.

But sometimes a good anecdotal zinger is all you need to have an interesting conversation.

[ image credit: Optician Training ]

Straying from a Standard Can Be Dangerous

Posted by Anu Heda on Mar 03, 2016, in Thoughts , tagged with ,

Our clients know we dig deep to unearth findings and recommendations worth pursuing. Sometimes that leads us to cataloging fact sheet data points across asset classes and boundaries (curious to the most frequent MPT stat in Belgium? Ask Mike!) In regulatory materials, there’s not much deviation from the status quo. Occasionally you find something slightly unusual and pause. We’re advocates of the Eaton Vance Fund-Approach-Features start to each fact sheet (like in this Small-Cap Fund). A qualitative description is a good place to deviate and try something compelling.

What is a bad place to deviate? Any $10,000 investment graph. Imagine our shock when seeing the above chart included in a fact sheet.

timothy10yr

What’s your first question when looking at this?

If you’re like me, you’re wondering how come this chart begins at $22,500 (roughly)?

Well to understand why, you need to read the endnotes (located on page 2) describing the chart as showing growth of 10K from inception (Class A – 1994). You would need a chart starting in March 1994 to show the growth of 10K into $45,088.

I can’t find an industry leader that shows a chart like this on a retail mutual fund. The aforementioned Eaton Vance chart shows the standard practice of starting at 10K, 10 (or 5) years ago.

Vanguard and BlackRock exemplify the standard Web practice with different time durations but always beginning at a standard $10/$100K.

Though most likely compliant, this chart feels dishonest in its departure from industry standard practices.

 

The Professional

Super Bowl 50: Highest Impact Commercial

Posted by Anu Heda on Feb 12, 2016, in Thoughts

 

Like most 2016 viewers, I’m equally interested in the commercials and the game (especially in this year’s defensive battle). There were so many clever commercials that made me laugh. But for me, the highest impact commercial came from Henkel‘s Persil ProClean. Why? Two reasons:

  1. Product Awareness – Simply, I had never heard of Persil before. This commercial introduced me to a new product. I’m highly aware of so many brands advertised during the Super Bowl that those brands become background to the entertainment value of the commercial. During the Persil commercial, I was taking note of the product.
  2. Relevancy – I’m mildly unhappy with many laundry detergents. So I’m looking out for viable, new options. This category is highly relevant to me (polar opposite to the successful eSurance advertisements as I don’t own a motor vehicle). Judging from this Wall Street Journal article, I am not alone in finding detergent relevant.

The U.S. laundry detergent industry is nearly a $4B (2014 sales) business, with one brand owning 50% market share. For Henkel to have success stealing share, the firm needed a successful awareness campaign. “The Professional” placed in SB50 succeeds. What was your favorite commercial? Use the contact page to let us know.

Reflation

The Positioning Impact of Launching ETFs

Posted by Mike McLaughlin on Feb 03, 2016, in Thoughts , tagged with , , ,

Last week OppenheimerFunds rebranded the recently-purchased RevenueShares ETF lineup as the Oppenheimer Factor Weighted ETFs. Given that the firm is new to the smart beta ETF space, a simple question crossed my mind: how do they now introduce themselves as a firm?

Traditional (for lack of a better word) actively-managed, mutual fund-oriented firms face a number of important strategic marketing and positioning questions when entering the ETF space. But among the most fundamental is figuring out how to adjust the messaging of who they are and what they do.

In many cases there is an established, legacy messaging platform that emphasizes elements – active management, specific investment philosophy or process tenets – that fail to mesh seamlessly with the expanded product line. As a result the new ETFs appear to be more of an opportunistic “bolt-on” than something grounded in the core beliefs of the firm.

OppenheimerFunds’ illustrates one approach to trying to overcome this issue, namely via a tagline (The Right Way to Invest) and four key principles that focus primarily on themes that are vehicle and strategy agnostic. But there are several firms whose stories fail to match up with their newly-expanded offerings. They, and the anticipated entrants into the ETF universe, will need to reconsider how they primarily want to define themselves and communicate their capabilities to the market.

[ image courtesy of Tony Hall ]