American Funds

“Small Data” is Becoming a Potentially Bigger Problem

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

“There are three kinds of lies: lies, damned lies, and statistics.” – Unknown

What do you see when you react to the following chart from American Funds?

american-funds-active-1

At first glance the title and bar charts do their jobs. The likely reaction from most readers is probably along the lines of it looks like the majority of American Funds’ mutual funds have done a good job beating their indexes. Point made.

But, someone (like me) might linger on the chart for a few extra seconds, leading some questions to come to mind:

  • What are “equity-focused” funds? Is the data set not just pure equity funds?
  • Is the data gross or net of fees? If gross, how does that impact the results?
  • Why is the “recent” track record defined as 10 years?

Here’s one more example that leads off a different American Funds piece supporting active management:

american-funds-active-2

Again, a cursory look gives a clear initial takeaway. A bit more consideration, however, can trigger a few more questions:

  • How were the specific thresholds for defining “Select Active” funds determined?
  • Is the data gross or net of fees? (Yes, this question is essentially ubiquitous.)
  • Why is only US Large Cap Equity included? How does the data vary for other categories?

These questions are the result of what I’ll call the industry’s “small data” issue. Small data is the information that asset managers use to support their ideas and research. It is the ever-present backbone of the countless arguments making the cases for asset classes, factors, specific mutual funds, and more.

The problem with small data is two-fold:

  1. The parameters and decision-making processes surrounding it are often unclear, even if someone willingly roots around the disclosures.
  2. There is no uniformity in the construction and use of small data between firms or even within a single firm.

Limited consistency and transparency on the context, definition, and presentation of small data can foster questions and skepticism. I (unscientifically) wonder if firms are unintentionally making it easier for people to doubt what they see or view such data as wholly self-serving, especially given people’s general distrust of marketing messages.

Despite the burden of disclosure, the use of small data makes me think firms might benefit from a more overt approach to communicating the context around the data they present. Clear, prominent, and consistent presentation of the key parameters and rationale for a data set may both reduce potential skepticism of that data and earn firms implicit credit for being up-front with clients.

Examining Industry Web Site Log-In and Registration

Posted by Anu Heda on Sep 12, 2016, in Thoughts , tagged with , , , , ,

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.

Eaton Vance Registration

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 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.

Marketing on Price the American Funds Way

Posted by Mike McLaughlin on Oct 25, 2010, in Thoughts , tagged with , ,

Part 3 in a series of three posts regarding price competition.  Read Part 1 here and Part 2 here.

Last week I argued that there’s an ocean of opportunity for asset managers to integrate price into their marketing efforts.  For a straightforward example of how this can be done effectively, look no further than American Funds, which does three things very nicely:

A simple graph on fees with a strong competitive message.

But we’re not American Funds.  That’s the easy objection.  And true.  But the principles of the approach can be adopted in specific ways that suit each firm.  For most every firm, one of the following is going to be true:

  • Fees or other costs have been reduced, in some cases dramatically, over the past few years.
  • Specific products are relatively inexpensive compared to peers.
  • Specific products have significantly outperformed competitively-priced peers.

Some are always going to be more capable in keeping prices low on a broad scale.  But all firms care about operating efficiently and should have evidence in hand to demonstrate that.  In other words, every firm can make price a part of their value proposition.  It’s up to marketers to identify the best way to do so.