blog

Accelerating Rate of Change

by Deb Wetherbee

I've been an industry observer for many years, and right now I'm excited to watch the rapid change our industry is going through. Historically, change has been slow for financial service firms. In the past I've seen several copy-cat strategies and witnessed a fear of first-mover disadvantage. This has been the case for products in development, marketing strategy, and the compensation structures in distribution companies.

Here are a few examples of the accelerated rate of change in the current environment:

Blending distribution channels: Wirehouses sub-advise for the fund supermarket and everyone has focused on the increase in the number of RIA's (and independent reps). UBS, for example, sub-advised a fund for Schwab. The RIA access this affords UBS is fantastic, and Schwab simultaneously acquires a great product with a 10 year track record.

Adapting to fewer wholesalers: We have seen the industry go back and forth between the generalist and specialist models, increasing and then decreasing the size of wholesaling teams, and experimenting with hybrid models. We never saw the seeds of real change until the environment forced it on us. Just as advisors have adapted to working in teams, wholesaling seems to be moving toward increased colaboration by adding a hybrid, a CFA-type analyst, or even a national accounts-type to the internal/external team.

Getting your message out there: This seems to be easier than ever, but the increased use of social networking is actually making it more complicated. In the past, fund companies had press releases, ads, marketing materials and wholesalers to spread the word. It was not easy to control a consistent message within these limited mediums. Today you have your customers (both advocates and detractors) spreading the word via web sites like Facebook or Twitter. Your press release can be a video on Youtube, text on Scribd, or a specific message on your own micro site that uses general educational materials to add value. The rapidity of message delivery has increased, whether we are ready or not.

The year has been difficult, but the opportunity to create and adapt to new business models, distribution strategies, product development processes, and advisor/consumer communication mediums is exciting. Internally, we've been considering many of these models and strategies for quite a while. Now we have the freedom to be creative. We can move away from the fear of first-mover disadvantages and start trying new things.