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Quality of Asset Manager Online Capabilities Impacts Advisors' Product Decisions

by Eric Daugherty

The fact that quality matters would not be a revelation in most arenas, but when it comes to asset managers' online capabilities, for some reason it is a surprising finding. Some firms have approached the Web with a "check the box" mentality, but not with the commitment and gusto necessary to differentiate the firm. However, it turns out that a top-notch Web presence is more than just a pretty face for the firm; it can help to drive business.

Recently, kasina released What Advisors Do Online (WADO) 2010. We found that many of the trends identified in past versions of the WADO series were confirmed: advisors are spending even more time online, gravitate to firm intranets first, are increasingly using mobile devices to communicate, access, and share content, and are warming up quickly to social media.

Most notable was this: 71.1% of advisors say that the quality of a firm's Web site impacts their usage of the firm's products. Put simply, a good Web site translates into revenue. This reinforces the need to continue to tie e-Business team output to business metrics as we talked about in our Optimizing the Role of e-Business report.

Key Findings from the What Advisors Do Online 2010 report include:

• 94% of advisors visit firm intranets


• Over 90% of advisors visit asset manager public or advisor sites


• Wholesalers who discuss firm Web sites with advisors impact use of those sites


• 75% of advisors use some form of social media, and 22% do so daily


• A majority of advisors uses mobile devices to access work content


• More than two-thirds of advisors share content with clients

Significant recommendations for improving online quality of asset managers emerge from the report. Among these are:

• Be everywhere advisors are online (intranets, industry and social sites) with content they want


• Make content portable and shareable


• Rationalize e-mail strategy to insure relevance and interaction

Advisors have spoken. Online capabilities are more than table stakes - they can be a differentiator. Advisors are more likely to buy products from firms with great online presences. The next move is up to asset managers.

We will not have to wait long to find out which firms' sites are the best, as our annual Top 10 Web Sites for Financial Intermediaries is coming up in September.

Get Your Wholesalers to Talk Up The Web

by Lee Kowarski

As part of our FA Vision service, we recently did a topical survey about financial intermediaries' online behavior. Among the findings (which will be explored further in an upcoming report entitled "What Advisors Do Online") was the fact that there was a strong correlation between the frequency with which a wholesaler mentioned their firm's Web site and the frequency of usage of the firm's advisor Web site.

• Among those advisors that had never spoken with a wholesaler about their firm's Web site, only 63.0% visited firms' advisor sites at least once a month.
• Among those advisors that occasionally discuss their firm's Web site capabilities, 74.7% visited firms' advisor sites at least once a month.
• Among those advisors that regularly discuss their firm's Web site capabilities, 87.2% visited firms' advisor sites at least once a month.

However, when I have traveled with wholesalers, I've heard some go as far as to disparage their firms' Web site by saying things like, "That information might be on the site, but it probably isn't up-to-date - you should just call me." These sentiments are typically the result of fear and a lack of understanding. Fear that a Web site would somehow replace the wholesaler and a lack of understanding that the Web actually supplements relationships. kasina's "Your Site Can Sell, Too" report found that advisors who receive wholesaler coverage and use the firm's Web site sell 25% more than those that simply receive wholesaler coverage. We are currently gathering updated data about that metric, but every analysis that we have done with clients has found a similar relationship between Web usage and increased sales.

The bottom line is that the Web can help support sales, and wholesalers are a key driver of Web site traffic. Firms need to open their wholesalers' eyes, get them to stop trashing the Web, and get them supporting it.

Why Asset Managers Need to Invest in Social Media NOW!

By Steven Miyao

I firmly believe that asset managers need to invest in a social media strategy for three reasons:
1. More advisors use social media than use asset managers' advisor sites
2. Personal and professional use of social media is converging
3. The current benchmark for asset managers' social media use is low - it's time to experiment

I've used our latest FA Vision research, cited in this blog entry, to explore these three reasons.

More advisors use social media than use asset mangers' advisor sites

Financial Advisors spend more time online now than ever before. They average 13.2 hours/week online (not including e-mail) for work related use and spend an additional 4.9 hours/week online for personal reasons. Most asset managers' advisors are infrequent visitors to their firms' advisor sites. However, 77.5% of advisors use social media sites at least once per month (up from 74.5% last year) and 20% use them daily.

Right now firms reach a limited number of advisors through their sites. If firms invest in their social media strategies, there is the potential to connect with a much larger group of advisors. Only 48% of firms claim any social media presence and fewer than 20% intend to develop a presence in the next twelve months. This is your opportunity to shine and to build a sustainable, competitive advantage.

Personal and professional use is converging

The father of one of my son's good friends is also one of my clients. We connect on Facebook in regards to our kids' school activities and after school events, but we also share industry articles and links. Social media is clearly starting to blur the line between professional and personal networks. We co-mingle colleagues, clients, friends, family, and those who share our varied interests within our social networks.

Let's take a look at my Facebook feeds. I "like" and connect with asset managers as well as my friends and colleagues. This enables me to see what is going on with my personal connections as well as to follow what Bill Gross, Mohamed El-Erian and other industry thought leaders have to say.

The same is true for financial advisors who are using social media sites for both personal and professional purposes.

The benchmark for social media is low - it's time to experiment

Most asset managers' social media implementations are still quite rudimentary. Only 20% of asset managers have a Facebook presence, 39% a LinkedIn presence, 24% a Twitter presence, and fewer than 20% intend to develop a presence in the next twelve months. This data indicates that the social media benchmark in our industry is still very low. Still, there are a number of asset managers who are working on building deep interactions with their advisors through social media, and are even starting to segment content to advisors based on product preferences.

There is opportunity in the number of people who "Like" an asset management Facebook site (PIMCO 2,284, Putnam 323) and who follow asset managers on Twitter (PIMCO 4,519, Putnam 871). Now, when only a few advisors are watching, is the time for asset managers to experiment with this medium. Once tens of thousands of advisors are connected with asset managers on Facebook, firms will have little room for taking chances.

Firms should be building the appropriate internal processes, including compliance, and working on the cultural adoptions to allow content delivery through social media. In the next 12 months the expectations and the usage of advisors is going to be significantly higher. Firms will no longer be able to infrequently post general investment content in order to gain the attention of the advisors.

Develop your social media strategy now

Now is the time to build your social media strategy

e-Business is still too much "e-", not enough "business"

By Eric Daugherty

While the Web came of age in the mid-to-late 90's, formal e-business teams have grown up in the 21st century. Use of the Web by financial services firms has gone from a curiosity to an experiment to a customer expectation. Yet, after an average of nine years of tenure, the majority of e-Business teams at asset management firms still have huge opportunities available to drive the bottom line. Only 39% of these teams develop business plans, and 35% measure whether they meet revenue or cost targets. When asked to categorize planned initiatives for 2010, firms indicated that only 31% contain a direct link to the firm's bottom line.

Our newest report, Optimizing the Role of e-Business, reviews how teams are evolving and presents a maturity model as a framework for driving continuous improvement.

We found that 64% of firms currently operate in the "Defined" stage, with the remaining 36% in the early "Managed" stage.

e-business is more vital than ever in a marketplace where firms compete fiercely to optimize distribution of their products. Too many teams operate in a comfort zone of site redesign and process management when they need to be focused on demonstrating impact to the bottom line. With 80% of advisors using asset managers' public sites and 90% accessing advisor sites (according to kasina's upcoming What Advisors Do Online 2010 report), the economics of improving e-Business team performance and output is compelling.

In particular, we recommend that e-business teams:

• Tie prioritization of initiatives to business results
• Leverage social media to broaden customer acquisition efforts and deliver content where customers are
• Outsource or distribute non-core functions
• Value and hire for e-business expertise from other industries, and
• Use zero-based budgeting and metrics to improve prioritization of initiatives

In summary, e-Business teams have made enormous contributions and headway in their firms. They are now vital and connected to nearly every significant initiative that firms undertake. Getting to the next level of e-Business and becoming a differentiator will take more than keeping core functionality running and operating a good web site. Great e-Business teams that get to the Managed and Optimized levels will be able to prove their integration with all aspects of their firm's business and justify their efforts by pointing to the profitability impact.

Are these new-fangled technologies for me?

By Rubesh Jacobs

Social media is all the rage. Conversations about how to leverage technologies such as webcasts, webinars, YouTube channels, podcasts, blogs, Slideshare, LinkedIn, Facebook, Twitter, ad infinitum are probably going on all around you. With an eye towards managing their brands, engaging their clients, and enhancing their reputations as innovative brands, firms such as Vanguard, Putnam, and TIAA-CREF are experimenting with at least one of these ground-breaking technologies.

In fact, kasina is notorious for engaging its clients in discourse about how best to use these technologies to improve sales, marketing, and services.

However, we sometimes recommend firms delay these investments in favor of focusing on essential online services instead.

Would it not appear irrational were a firm whose Web site barely allows searching and sorting product performance information to place prominence on video updates from their chief economist? What about tweeting when your last thought leadership piece is a month old? Or spend an inordinate amount of resources on business-building tools for advisors when the advisors complain about remembering their passwords? The scenarios are endless...

The root causes are somewhere in the organizational structure, culture, strategic planning process, etc. Rarely is it a result of lack of competency, creativity, or savvy. Many firms that are experimenting with social media now have spent years getting the basics right.

So, if you are considering the use of these new technologies, I urge you to first consider the following:

1. Are your customers' basic, most important needs fulfilled now? If the answer is not a resounding "YES," then examine what you can improve.
2. Have you built support for your idea around the organization for the investments in new technologies? If you can't convince yourself that you have, then you need more time.
3. Can you articulate why some of these technologies make sense for your business? The answer should at least make sense to start a serious, fact-based discussion.

Don't let me dampen your spirits. The message here is this: be prudent about where you place your bets. The next big thing is not always the best thing for your business.

Top 5 Sites for DC Plan Sponsors and Participants Take Center Stage

By Eric Daugherty

Asset management firms are making significant investments to improve their Web sites, particularly in the Defined Contribution (DC) space. Our latest study, Top 5 Web Sites for DC Plan Sponsors and Participants, shows that these investments are being made to improve functionality that is most vital to employers and their employees.
Much has changed since our 2007 study on the same topic. Notably:

• For asset managers - technology advances have allowed them to provide enhanced user experience and functionality


• For plan sponsors - squeezed budgets and continually increasing regulatory and fiduciary requirements make ease of administration more important; in addition, participant uncertainty over retirement and increasing reliance on DC plans ramps up importance of auto-enroll, auto-contribute, and auto-increase functionality


• For participants - declining markets and increased reliance on personal saving has people paying a lot more attention to their DC plans

Asset managers have responded to these challenges by hitting those areas of most concern to sponsors and participants. Specifically, we now see much more functionality for sponsors geared toward plan and participant analysis, fiduciary compliance and participant communication. T. Rowe Price's plan sponsor site below is a great example, as sponsors use a calendar to plan and track key activities. Additionally, firms have enhanced the analytical capabilities sponsors can use to do custom reporting and drive behavior for particular participant segments (e.g. those not maximizing their contributions.)

On the participant side, firms have recognized that clients go to their site primarily for a short list of activities: to get a comprehensive look at their account balances, make transactions, and get education and advice. Consequently, firms have organized Web sites to make these areas complete, prominent, and easy to navigate.

Specific results for the Top 5 DC Plan Sponsor and Participant sites are shown below. The full report has details, including best practice functionality for each of the top sites, and recommendations for all firms.

At kasina, we're looking forward to discussing the insights gleaned from this year's report with all of our subscribers. To discuss these findings, or other aspects of the report, e-mail us with questions or thoughts.

First e-Business Steps When Going Global

By Rubesh Jacobs

Prevailing trends in the asset management industry indicate that if you are not a global asset manager already, the chances are you will be one within the next few years. If you are, then you are fully aware of the challenges that localization, local regulations, local leadership demands, and team cohesiveness pose.

Our work with multinational asset manager suggests that once asset managers become multinational companies, the e-Business organizations are unsure about what the first post-merger integration steps ought to be.
Heads of e-Business should consider the following critical initial steps:

1. Introduce yourself to the new global family: There will no doubt be countless executives crisscrossing the globe as they scramble to build relationships; develop a firm understanding about their new customers, distribution channels, and products; and regulatory requirements. Join the fun!
2. Set-up a Global e-Business Committee: At the outset, it is not only critical to establish who and how decisions will be made, but also how foreign teams will contribute and be a part of the process going forward. To this end, we recommend forming a Global e-Business Committee chaired by a Head of e-Business. Although their composition and role will certainly evolve as the new organization defines itself, at least in the beginning, the committee should primarily focus on establishing the tactical 3-month, 6-month, and 12-month plans, prioritization, and resource allocation. Ideally, the team should typically comprise the head of marketing/branding, head of post merger integration, head of IT, counterpart heads of e-Business counterparts, and heads of large or otherwise significant foreign markets.
3. Centralize management of all Web sites: While the initial decisions about branding, distribution, and products evolve over the first year, projecting a consistent and global image and sharing thought leadership capabilities are better accomplished through centralization.

• Establish a clear reporting structure, roles, and accountabilities. An imperative new role is that of e-Business Program Manager to oversee the post-merger integration of e-Business organization, technology, and processes. Prior experience working across multinational divisions and program management are a must.


• This can change as the PMI effort evolves and strategy becomes clearer. But at least for the first year, centralize. All BIG decisions will be approved by the e-Business committee.


• Drive scalability and consistency in international Web sites by using standard templates. For the most part the templates will contain common global content, but can also be reconfigured to fit the unique local conditions.

Another Important Reason for Asset Managers to Cultivate a Presence Online

by Drew Maniglia

As a part of my work on FA Vision, I have recently had an opportunity to look back at the "What Advisors Do Online" survey from 2009. I came across some interesting insights that help put to bed the commonly held belief that those advisors who frequent the Web represent a lower value group. This is a notion that I had heard questioned in several conversations, and I wanted to see if it was true.

In 2009, kasina conducted its "What Advisors Do Online" survey and the respondents had AUM ranging from $1MM to $5 BN, with the overall sample average at $120 MM AUM. The one hundred advisors with the most assets under management (the top quintile by AUM) had an average of $443 MM AUM. Trends focusing on these top one hundred advisors reveal that top producing advisors are indeed frequenting the Web to the same, and in some cases to a greater extent than the average advisor. Of these one hundred top producers, 45% reported visiting LinkedIn, and 42% claimed to use YouTube. In addition to these social media sites, top value advisors are also visiting industry specific sites like Morningstar, Ignites, and asset managers' sites - of the top 100 advisors, 75% visit asset managers' public Web sites, and 91% visit asset managers' advisor Websites. Furthermore, advisors who visit Morningstar.com on a daily basis have average AUM over 90% higher than those who visit the site with less frequency. All of this suggests that high level advisors are quite active on the internet.

I think this is useful for asset managers to internalize. Asset managers have access to a valuable cross section of clients and prospects online, so there should be a strong incentive to focus on Web strategy and cultivate a presence everywhere from LinkedIn to standard industry sites. In doing so, firms will be reaching out to some very worthwhile advisors.

How iPads May Help Wholesalers

by Lee Kowarski

Since Apple introduced the iPad, several articles have discussed how financial advisors will be among the audiences to benefit the most. While iPads can certainly be helpful for advisors, I think that the iPad will have a greater impact on how wholesalers use technology. Before the iPad was introduced, I'd already heard of several asset managers that were considering scrapping laptops for their wholesalers and replacing them with netbooks. I think that firms should now explore the opportunities presented by the iPad to enable wholesalers to access CRM information, access intranet content (e.g. brochures, fact sheets, etc.), present content to advisors (including dynamic charts, videos, and more), and more.

The iPad will boast many advantages over both PDAs (e.g. BlackBerrys and iPhones) and laptops or netbooks:

• Simplicity of use - perhaps the key advantage of an iPad is that it has an intuitive user experience that doesn't require technology expertise. Wholesalers, traditionally, are not the most tech savvy folks and will appreciate the simplicity of Apple's design
• Battery life - the iPad should be able to last a full day of meetings without needing a recharge - the same cannot be said for most laptops or netbooks.
• Weight - while heavier (and larger) than a BlackBerry or iPhone, the iPad is far lighter than any laptop or netbook.
• "Cool" factor - for at least the first several months, having an iPad will be a conversation piece with advisors.

Because asset managers are typically so slow to embrace new technology, I don't expect many firms to get iPads in the short-term, but I do think it is well worth exploring.

Social Media is Here to Stay

by Julia Binder

Asset management firms need to be where their customers are. That's not on their Web sites. It's on Facebook, Twitter, YouTube and LinkedIn.

When we surveyed executives at asset management firms last fall about compliance issues with respect to social media, 73% responded that compliance or legal concerns impeded their ability to participate in social media.

At that time, only a few firms including American Century, Putnam, TIAA-CREF, Vanguard and others had ventured into the lawless Wild West that is social media. They applied existing compliance processes and sought legal guidance to support their as yet limited participation. All waited for clarification from the SEC and FINRA.

Well, FINRA has spoken. And thus, compliance issues around third-party content and record-keeping have been addressed and effectively removed as an excuse to remain on the sidelines. That doesn't mean that firms should dive in without a plan. kasina's newest paper, The Asset Manager's Guide to Social Media, helps firms understand opportunities and challenges associated with social media. You'll find a rich set of examples from the asset management industry and others on:

• Developing a social media strategy,


• Who's doing what and why, and


• Implementing best practices in compliance and monitoring.

The lack of clear FINRA and SEC guidance coupled with the fear of legal repercussions has kept firms from plunging into social media. But consider, as communicators subject to regulation, you are used to building caution into the way you approach all communications.

Social media is here to stay. It's time to review how social media fits into your communications strategy.

2010 Predictions

by Steven Miyao

These are interesting times in asset management. Aside from ups and downs in the markets, we have seen significant changes in the economy, industry product trends, distribution and e-business. So, I will lay out a few prognostications in each of these areas:

Industry trends:

1. Bond flows continue to dominate (>70% of flows) early in the year. Flows into equities dominate (>70% of total) the 2nd half of the year, after definitive data says that the economy is improving. Continuing a long-standing trend, investor flows follow performance. Strong equity flows replace bond flows after the stock market surges and after interest rates start to rise and bond prices fall.

2. Net flows continue to go predominantly to low fee shops, as the miniscule total returns of the past 10 years magnify the importance of fees. Those shops without low fees only draw net flows if their products are truly differentiated.

3. From a trough of 18% in the 1st quarter of 2009, gross profit margins for firms climb back above 30% again (2008 margins were at 30% for publicly traded asset managers). The ultimate winners will be those who maintain their focus and fiscal discipline even after assets recover, setting themselves up for sustained, intelligent growth.

Strategy and product:

4. M&A picks up, in number if not in dollar terms. Firms have shored up balance sheets. Those in the best financial shape look to acquire in order to expand international presence, shore up product gaps, bring on an attractive brand name, and gain scale. Small to mid-size firms with entrenched brand names or specialized product expertise are attractive targets. While we don't expect to see deals of the size of BlackRock/BGI, we do expect to see a handful of mid-size household names change hands.

5. Guaranteed income products become hot, both in and out of retirement plans (albeit hotter in retirement plans than outside). Limiting downside risk in portfolios continues as a focus for retail and institutional investors.

6. ETFs continue to proliferate and gain market share. Advisors continue to gravitate clients from open-end funds to ETFs as advisors understand how to optimize usage of ETFs and firms continue plug product lineup holes with all possible flavors of ETFs.

Distribution:

7. Wholesaler compensation continues to recover. Average total compensation for external wholesalers, which was $372,000 in 2007 and dropped to $295,000 in 2008, fully recovers to 2007 levels. While the ample supply of talent looking for work should suppress wages, firms' healthier financial positions, their desire to take care of their best performers, and renewed positive net flows puts upward pressure on total compensation.

8. Ten of the top 20 firms in assets have hybrid wholesalers by the end of 2010. The cost-effectiveness of hybrids is being proven by the early adopters. Additionally, advisors indicate more willingness to deal remotely and less time to meet face-to-face, both of which point towards internals and hybrids becoming more important.

9. Firms continue to leverage technology by experimenting with video, audio, and web conferencing capabilities to deliver 1-to-1 (wholesaler-to-advisor) and 1-to-many (interactive Q&A with in-house experts) interactions.

e-business:

10. Social media becomes mainstream in financial services, but the level of commitment is varied, some firms diving in with both feet, some much more cautiously. Progressive firms experiment with different media in both B-to-B and B-to-C arenas. By year-end, 18 of the top 20 firms in assets have dedicated pieces of their budgets to social media.

11. Firms begin to move away from considering their websites as the central repository of content and towards supporting broader distributed content (e.g. SlideShare, Scribd). As print costs skyrocket, advisor only content becomes outdated, and people are free to distribute content anyway, firms will decide to make this as easy as possible by making their content portable and omnipresent. One major firm takes the leap, and spends as much on managing and facilitating data and content in the "distributed arena" as they do on their own website.

Have a Policy and Enforce It

by Lee Kowarski

As you may have read in Ignites earlier this week, Fidelity fired four workers for violating the firm's anti-gambling policies by playing fantasy football at work. While I am personally a big fan of fantasy sports and am glad that kasina does not have policies against participating, I applaud Fidelity for enforcing its policies. One issue that I see increasingly popping up in regards to the whole social media trend is the lack of uniform enforcement of corporate policies. As Christophe Veltsos, president of Prudent Security LLC, says, "The easiest way for a company to lose a wrongful termination case is to demonstrate shoddy or selective enforcement of its own internal policies."

Currently, only 34% of firms have a policy that governs employees' online activity outside of work and only 10% have a policy that specifically addresses social networking sites. Many asset management and insurance companies have general policies on the books that technically prohibit participation in LinkedIn and other social networks, but most firms do not enforce these policies. This can certainly lead to complex legal issues if firms selectively chose to act. Every firm should have a clear policy outlining what employees can or cannot do online (both at work and outside of work) and should make sure that the policy can be uniformly enforced.

Finally, please wish me luck in the fantasy football playoffs this weekend.

And Then There Were Ten

by Eric Daugherty

Firms are putting advisors' needs front and center as they upgrade their Web sites.

2009 marks the release of kasina's 11th annual Top 10 Web Sites for Financial Intermediaries report. It's amazing how far firms have come, and how much more vital and vibrant the Web is versus 11 years ago. Back then, firms were still contemplating whether (not how) the Web would become an important client service and marketing channel for them. Today, the notion of NOT having top-notch Web content, tools, and servicing is laughable.

This year's Top 10 Web Sites For Financial Intermediaries had few of the drastic site overhauls that characterized 2008. However, we did see firms striving to meet advisors' needs. In particular:

• Firms are using sophisticated underlying technology to provide a simpler user experience - simplicity through complexity; most notably, this involves bringing content "up" to the users, instead of requiring them to drill "down"
• There is an increasing focus on customization, allowing the advisor to personalize his/her experience and way of interacting with the Web site
• There is a trend towards more interactivity and multimedia content

Specific firms of note this year include:

• BlackRock ascending to the top spot, with a Tool Center that gives advisors everything they need to use the tools effectively with clients, and Conversation Starters that arm advisors with strategies to answer common and challenging client questions



• John Hancock continuing its run in the Top 10, with Dynamic Literature Ordering and a keen focus on its brand
• JPMorgan jumping from #9 to #3 based largely on its simplified presentation of fund analysis via dynamic screening, as well as its Markets Insights program

At kasina, we're looking forward to discussing the insight gleaned from this year's report with all of our subscribers. To discuss these findings, or other aspects of the report, E-mail us with questions or thoughts. Or better yet, use the kasina forum to post thoughts and questions.

Advisors look alike, but do they have the same preferences?

by Steven Miyao

Most marketing messages don't resonate with advisors because they are not pertinent to their needs. Asset managers need to invest in asking questions that enable advisors to be segmented based on preferences.

Advisors have specific needs
Last week we invited four RIAs to our e-business roundtable. On the surface, the four advisors looked alike: all were from NYC, all were male, and all had about the same amount of AUM. When asked what asset manager content most resonated with them, each had completely different needs and preferences. One advisor got a lot of value out of the business building content that an asset manager sent him, another advisor preferred to get investment ideas and didn't need the business building information.

Marketing messages need to add value
The lesson learned from this advisor panel is that asset managers need to segment their advisors based on their needs and preferences, rather than using demographic information from a CRM system.

Think about your own behavior. What e-mails do you always read?

You only open e-mails that always contain at least one or two things that you are interested in (an example might be the daily Ignites emails). If someone sends you a number of e-mails that don't have value for you, you will stop opening them. Every time these messages pop up in your inbox, you immediately delete them.

In order to have advisors respond to your messaging, the content of an e-mail has to specifically address their needs. This can only be accomplished if asset managers understand what those needs are.

Use your e-mails and the Web site to gather advisor preferences
Profiling advisors is not an easy task and can't be accomplished in one quick survey. Luckily, both e-mail and the Web are perfect mediums to collect data from advisors.

A few techniques to collect data through e-mail and the Web:

• Track the specific messages that advisors open and click through
• Ask advisors to rate both e-mails and Web content with a simple thumbs up or down
• Occasionally ask a single preference question after the login
• Conduct polls and show the advisor how the community has responded to these polls

All of this data needs to be associated with a specific advisor and continuously tracked in order for you to send more targeted messages to that advisor.

It will take time, so get started
It will take time to segment your advisors, but the sooner you start, the sooner you will be able to send targeted messages that will yield more effective responses from those advisors.

Advisors Ramp Up Online Usage, Go Mobile, Get Social

by Eric Daugherty

This week, kasina released "What Advisors Do Online 2009". We found that advisors are spending even more time on online, are increasingly using mobile devices to communicate and access content, and are warming to social media.

This study builds on our 2008 study. The last 18 months of turmoil have:

• Driven advisors online more; over half of advisors have increased online usage by 1-3 hours per week, a quarter by more than 3 hours per week;
• Caused them to see business building and sales ideas;
• Incited them to check client information more and ramp up communications with clients.

Notably, this increased online usage is happening more via mobile devices than ever before, with nearly 80% of advisors using some form of device to access content remotely.

Regarding social media, while usage among advisors is not universal, there are signs that it is increasing, and that a wave of adoption is on the horizon. About 48% and 43% of advisors visit LinkedIn and Facebook, respectively.

While we are all searching for cheap ways to be more effective, one easy way for asset managers to do this is to start building links to intranets, portals, and search engines - and make content accessible from multiple devices. This can usually fit into any strategic plan size.

Is it Easier to Service the RIA Market Today?

by Deb Wetherbee

Historically the RIA market has been a challenging channel for asset managers to cover for many reasons. Generally speaking, RIAs do not like wholesalers, do not feel asset managers contribute to their value proposition, have fickle, "entrepreneurial" personalities, and are located in disperse geographic locations. This makes coverage models frustrating and expensive. However, there are clear signs that RIA receptivity to asset managers is changing.

The current market environment has led many advisors to change firms and to shift channels altogether. In addition, RIAs core investment philosophies were tested over the last year. These facts, combined with asset growth in the channel, make the RIA channel very appealing. More than 70% of RIA's new assets are coming from full service firms, according to a TD Ameritrade survey.

By some accounts, it appears that RIAs may even be eager for your advice. We saw this in the wirehouse and independent channel as early as last December. Our partner, Horsesmouth had a record number of financial advisors seeking out content, asking for advice on how to talk to their clients, and simply looking for a place to share the horrors of the day. These sentiments were echoed at kasina's recent Distribution Summit by Ron Fiske, EVP at Fidelity, as he discussed the Registered Investment Advisors that his division services. After selling to RIAs in the late 1990's myself, it was refreshing to hear that the time may have come for RIAs to willingly accept information from asset managers. RIAs are looking to understand and to provide clients with explanations. Whether economic, portfolio related, or tax-centric, it appears that your thought leadership will now be well received.

This paradigm shift, in conjunction with the fact that RIAs appreciate web-based communication, makes servicing them a profitable proposition. Our FA Vision research shows that 61% of RIAs prefer web / e-mail based communication over the more expensive phone and in-person service. There are many successful hybrid teams servicing this channel, which is a much more efficient distribution model.

As you develop your 2010 plan and focus on profitability, think about the RIA channel. Keep in mind that you may finally be able to leverage your existing content. Review your economic and portfolio manager content and communication strategies, and think about webinars and hybrids. It is even likely that an existing business-building program is perfect for this audience. The strategy to grow your RIA business could be a profitable one for a change.

kasina Study Recognizes Top Variable Annuity Web Sites

by Eric Daugherty

In September, kasina released "2009 Top 5 Web Sites for Financial Advisors: Variable Annuities". In the study, we sought to identify the top firms that most effectively leverage the Web to promote and establish their variable annuity presences.

During this Variable Annuity study we learned a lot about which firms are differentiating their products and their websites. The top five firms are: AXA Distributors, SunAmerica, Lincoln Financial, John Hancock, and Pacific Life.

Top site features are diverse and include microsites, product filtering systems, automated forms, calculators, marketing materials and support, advisor sales support, application wizards, and comprehensive market commentaries. The image below shows AXA's product performance graphing function, which gives advisors the opportunity to analyze trends and compare subaccounts.

The last eighteen months have been tough on the variable annuity (VA) business. Consider:

• There are nearly 1500 unique products competing for assets
• Total VA assets declined 24% from 2007 to 2008
• Sales of variable annuities dropped 15% from 2007 to 2008, with Q1 2009 exhibiting another 27% decline year-over-year

With those challenges behind them, we anticipate that annuity providers will continue to innovate, using both their products and their websites. Investors' appetites for products that provide some downside protection or assurance of retirement income are on the rise. Consequently, annuities, and the websites that support them, will be vitally important going forward.

It Is Like 1996 All Over Again

by Lee Kowarski

On Tuesday, I spoke on a panel for the ICI's Public Communications Committee about social media. I wanted to share a few key take-aways from our discussion:

• The question isn't "Should We?" but "How?" - Back in the mid-90s, many clients asked me whether or not they should have a Web site. While that question seems laughable today, I used to tell people that every firm needed to be on the Web and that their focus should be on developing a well thought-through strategy to use the Web effectively. The same thing is true today for social media: firms shouldn't just run out and join Facebook and Twitter, but rather sit down and formulate a clear social media strategy. Every firm will not end up joining every social media site, but every firm will have a social media presence of some kind.
• Regulators are open to social media - A representative from FINRA that was on the panel shared that the organization is actively working on establishing clearer rules regarding social media through a Task Force and as part of the new Regulatory Notice 0955. Perhaps more importantly, it became clear through the discussion that most firms are under the belief that the regulators are far more restrictive when it comes to social media than they actually are, and that it is typically firms' internal departments that are holding them back.
• Have clear policies - Whether your firm jumps into the social media space head first or not, every firm should have a clear, well-communicated policy around what employees can and cannot do on various social media sites. IBM made its policy available online and may serve as a guide for firms looking to articulate their own.

Today, the focus of the buzz is on Twitter and Facebook. A few years ago it was Friendster and MySpace. Tomorrow, it may be UStream and a community that doesn't even exist yet. Regardless of the specific site(s), social media (like the Web) is here to stay. You shouldn't be asking if you need to join the fray, but rather thinking about how you can most effectively embrace social media.

Who is Really Tweeting?

by Andy Edwards

When considering the role of social networking in their online strategies, e-Business professionals shouldn't assume that all technologies attract the same users. "I just think it's weird and I don't feel like everyone needs to know what I'm doing every second of my life." This is not the comment of a hardened 50-year old business professional. 18-year old Kristen Nagy made the comment in a recent New York Times article about the demographics of those using Twitter, the social networking technology. The article goes on to quote Jeremiah Owyang, an industry analyst studying social media, who notes that "Twitter did not attract the young trendsetters at the outset. Its growth has instead come from adults who might not have used other social sites before Twitter."

The piece asserts that traditional social networking tools such as Facebook and Myspace attracted teenagers in droves at first, since their focus was on connecting with friends. Since most social interaction amongst this demographic occurs between friends, these platforms served as an ideal conduit for that discourse. Twitter, on the other hand is, "better for broadcasting ideas or questions and answers to the outside world or for marketing a product. It is also useful for marketing the person doing the tweeting, a need few teenagers are attuned to."

Such needs aren't on the top of most teenagers' to-do lists, but these goals are top priorities for sales and marketing professionals in the insurance and asset management industry. kasina's research on advisor behavior online indicates that it is not just the younger generation of advisors who use the Web as part of their investment selection process. These latest findings about Twitter underline the important point that all social networking tools are not the same. Serious thought needs to be put into whether to embrace these technologies on a case-by-case basis. Has your firm Tweeted lately?

Aligning Business Units During 2010 Planning

by Anu Heda

In the August Industry Analysis Brief, Mike McLaughlin wrote an article about "Staying the Strategic Course". One important message from that article - align goals across business units to improve ROIC.

As part of the Industry Analysis service, I lead discussions each month with subscribers. Each subscribing e-Business organization admitted to having little familiarity with Sales esand goals. If that's the case, building a Web site to support sales is going to be pretty difficult. Here are four simple, no-hard-dollar-cost actions that e-Business teams can take to rectify the issue:

1. Learn the "Sales Goals" - Are they to grow net new advisors? Is 2010 the year to focus on Raymond James? Whatever they are, learn that organization's goals.

2. Ask for an introduction to the "Sales Process" - Most firms use a multi-step, consultative approach that takes a prospective advisor from "unfamiliar with the firm" to "dropping a ticket" (or beyond). Learn the basics of that process.

3. Emphasize Online Tools that Can Aid the Sales Process - In the sales process, there will be periods during which interactivity is more advantageous than person-to-person contact. For instance, if the sales process includes "introducing thought leadership", then many advisors will prefer video, Webinars, online articles, or searchable market commentary over large binders that are sent to their offices.

4. Align some part of the e-Business goals with Sales - Suggest that the e-Business goals overlap with Sales to ensure both organizations move together. If the Sales goal is to grow and net new advisors, then drive resources towards the goal of e-Marketing and netting new Web site registrants.

This can clearly lead to increased operational efficiencies and to improved goal planning.

How Asset Managers Should Use LinkedIn

by Steven Miyao

In the August addition of our Industry Analysis, a monthly service that helps asset managers evolve their online offerings, I wrote about how asset management companies have a real opportunity to take advantage of the LinkedIn Networks that their wholesalers have built.

There are approximately 700 mutual fund wholesalers and 46,000 financial advisors on LinkedIn. Most asset managers have been ignoring this platform, despite the fact that it offers an easy opportunity to connect with these clients.

LinkedIn is different from most other social media sites (such as Facebook and Twitter) because it is exclusively a user-driven, professional networking site. The site was originally a career building site on which users could post their resumes and interact with other professionals in order to gain access to job opportunities. Over the last few years, the site has evolved to provide wholesalers and marketers with the ability to interact directly with targeted advisors.

Your wholesalers hold the key to your firm's LinkedIn success. They are the individuals within your organization who have established a network with the advisors. Therefore, advisors will want to connect with them online in the same way that they connect with them in person.

Many wholesalers and advisors employed by firms that restrict LinkedIn connect to the network on their home computers. Merrill Lynch seems to be one of the firms that restricts access at work, but 6,855 Merrill Lynch financial advisors are on LinkedIn. Asset managers can choose to ignore the trend towards active usage and restrict access, or they can embrace usage and find ways to incorporate LinkedIn into their general business practices. Some firms may not find a way to take advantage of this medium, but their competitors most certainly will.

Help your wholesalers to improve their LinkedIn profiles. When your wholesalers connect with advisors, they should represent themselves and the firm in the best light. We recommend the following six steps when updating your wholesalers' profile pages:

1. Make sure they complete 100% of their LinkedIn profiles to include:
- A current position
- Two past positions
- Educational background
- A profile summary
- A profile photo
- Their specialties
- At least three recommendations

2. Encourage them to get key recommendations from their advisors

3. Provide them with a profile picture that they can upload

4. Include your advisor Web site URL

5. Ensure that they do not block incoming e-mails

6. Show them how to create polls

LinkedIn is going to continue to gain popularity among financial advisors and wholesalers. Start the process now, keeping compliance challenges in mind. Your firm will get a leg up on the competition by helping your wholesalers take advantage of this medium.

Creating Emotional Connections With Technology

by Mike Ma

Watch this TED talk from Tom Wujec at Autodesk. It's a good use of 6 minutes of your day. He talks about the ways in which humans create emotional connections and relates them to Web and technology development.

In particular, wait for the ending at 5:35. Imagine if we had applications like his sustainability building demo. What if you could use a portfolio builder that used your image as the main character in order to show a different life that you could be leading?

We've done a lot of research that outlines the ways in which better Web sites produce better sales. However, I think we have just scratched the surface of what "better" means. Right now, we just look at the Web as a cost-effective way to distribute information and data (primarily numbers and text). Which firms focus on using the Web (or any technology) to help explain their individual stories, big ideas, and provide a context for their products? Who is employing an emotional connection in their strategic plan?

Customized Domains - Will Asset Managers Snap Up Online Vanity Plates?

by Mike McLaughlin

Since the beginning, Web sites have been built around ubiquitous extensions such as .com, .net, .org, .gov, and .edu. These suffixes have both simplified and limited the Internet. Later this year, everything will change in the realm of domain suffixes. But what will the resulting changes be for asset managers and their Web sites?

Farhad Manjoo at Slate.com (one of the five best Web sites in existence) superbly summarizes the pending changes to domain-naming conventions. The gist is that ICANN, the international non-profit that regulates online addresses, is green-lighting a domain-name free-for-all starting in late 2009. With limited legal and (ahem) moral restrictions, individuals and firms will be able to create customized domain suffixes.

Forget kasina.com. Now we can potentially snap up kasina.consulting. Asset managers can go the same route: fidelity.com becomes fidelity.investments. Suddenly the sometimes pesky period in T. Rowe Price becomes an asset, and anyone who uses a first initial and their middle name should be fired up.

However, as Manjoo points out, this flexibility in crafting domains is not really necessary. The reality is that modern browsers and search engines have greatly diminished the need for such complexity. It is no longer vital to have the perfectly crafted domain name and suffix. Internet Explorer and Google are smart enough to find kasina's site without anyone knowing whether we're kasina.consulting or kasina.com.

Although I agree with Manjoo, I think he is overlooking the phenomenon of vanity license plates. Car owners don't need these, but many drivers choose to spend money on this mode of expression. For example, a friend of mine has dreams of getting approval for a vanity plate that contains a disguised expletive.

I think the changes from ICANN will yield similar results. People and firms will not need fancy, specific domain suffixes, but some are going to snap them up anyway. Asset managers are included in this, as I see two potential applications:

1. Branding and Differentiation: Many asset managers end their names with terms like "investments" or "funds", but under ICANN's plan only one firm can own those suffixes. Is there some cachet to have a firm's Web address as firmname.funds while everyone else is firmnamefunds.com? I suspect a few firms will answer "yes".

2. Campaign Support: Pioneer recently launched a microsite to support its View the Values campaign at viewthevalues.com. With relaxed naming conventions Pioneer could instead utilize addresses such as viewthevalues.pioneer, or even view.the.values. In pure-play Web marketing initiatives, funky domain suffixes could have increased appeal.

So, back to the original question: will customized domain suffixes change much for asset managers? Probably not. But the changes that do occur will certainly be interesting.

Improving Your Distribution Strategy Based on Advisor Data = Advisor Vision

by Lee

As you may have read in Ignites this morning, kasina and Horsesmouth have partnered to launch Advisor Vision, a new service that provides executives with the information that they need to evolve their intermediary distribution strategy into one that is more profitable and sustainable.

Given the amazing amount of changes in the financial intermediary space due to the markets, broker/dealer mergers, etc., asset management firms have an increased need to understand what financial intermediaries are thinking and doing. At the same time, distribution executives are looking for guidance on how to improve the allocation of their resources in an effort to maintain profit margins, which are shrinking from an average of about 35% to 15% or less.

Recognizing these challenges, Advisor Vision taps into the Horsesmouth community of over 70,000 financial intermediaries from 300+ firms on a daily basis and provides asset management firms with detailed, actionable recommendations that are dictated by their business strategy. The frequency of the surveys and the transparency of the data are unparalleled in the market today. Along with the uncensored survey data, Advisor Vision provides clients with a level of customized analysis and recommendations that makes Advisor Vision a necessary tool for all forward-looking distribution executives.

More details are available online or e-mail me to set up some time to discuss our new offering.

Fighting the Downturn from the Top Line

by Mike McLaughlin

Amidst the ongoing cost-cutting across the asset management industry, an old Harvard Business Review article provided me with a good reminder this week.

Leading Change from the Top Line presents an interview with Schering-Plough executive Fred Hassan and his strategy for turning around flagging businesses. Mr. Hassan's approach contains good food-for-thought for asset managers.

Unlike many of his peers, and, coincidentally, current asset management executives, Mr. Hassan prioritizes top-line growth to navigate difficult business environments. In other words, in tough times he focuses on motivating and investing in salespeople to foster a business turnaround. Three primary reasons:

• Product development cycles (in Mr. Hassan's business, and in ours) are too lengthy to immediately transform results.
• At some point, there are no more costs to cut. Cost management can help for a year or two, but top-line and market share growth do more to ensure long-run success.
• Salespeople most directly impact clients' moods. As their morale goes, so goes that of clients. And damaged or lost client relationships can take 6-18 months to repair.

That last point resonates most with me. Assuming the markets eventually recover, a motivated, positive salesforce can enable a firm to take advantage of that recovery ahead of the competition.

Of course, many asset managers face additional issues within the sales ranks. Specifically:

• Firms have already shed many wholesalers.
• The wholesalers that remain in place are not the happiest campers. Any loosening of the labor market will bring a lot of turnover along with it.

So where does this leave us? For firms to position sales to help lead themselves and their customers to greener pastures, I think firms need to take honest stock of three things:

• Sales Morale: If the market recovers later this year, how much turnover will we see? How much disruption will this turnover cause to our relationships and our business?
• Compensation Structure: Does our sales compensation model do enough to protect our sales professionals in down times and the firm when business is great? Or does it ensure drastic highs and lows that undermine the stability of the team?
• Team Structure: How can we inject or augment our use of hybrid wholesalers to expand our relationships with advisors and gather assets more cost-effectively?

It is vital that firms undertake these analyses now, not after things have turned for the better. By then, it'll be too late. Proactivity on all three fronts - morale, comp, team structure - will position firms to deliver on Mr. Hassan's tried-and-true strategy of using the sales team to lead business turnaround.

Regaining Investor Confidence

by Eric

Investors' primary concerns these days are twofold: (1) is my money safe? and (2) does investing still even make sense? Asset managers and advisors used to have to prove the superiority of their products and services. Since the market meltdown and abuses of investor trust, though, the importance of stacking up versus the competition fades to a distant third after the two questions above. If asset managers are to grow and thrive post-recession, they need to face these two questions head-on.

The first of these questions is fairly straight-forward. Investors have heard enough about Madoff and Stanford to be very wary of turning over their money to just anyone. Discerning the real good guys requires some diligence. Ultimately, reputation, track record, social media, feedback loops and ratings, client loyalty scores, and redemption rates will all signal to investors who is trustworthy and who is not.

The second question for the industry is far tougher. Many investors regret having invested their savings over the last ten years (the "lost decade"). Investing in the markets, once taken for granted as a smart thing to do, has yielded poor returns for many investors. However, there are two ways for investors to react to the results, and the difference between these two viewpoints is vital for asset managers.

Some investors infer that they made a bad decision to invest at all. Others see the results as bad outcomes of good decisions, which happen from time to time. This is not just an academic distinction, because it has implications for future decision making. To hammer home the point, offer me an even-money bet based on the roll of a fair die: I win if it comes up 1, 2, 3, 4, 5; you win if it comes up 6. We roll the die, it comes up 6, and you win. Did I make a bad bet? No! I took a risk and made a rational decision that did not work out, one that I would take again as many times as you offered it.

One cannot always infer the quality of the decision merely from the nature of the outcome. Investing in the markets the last ten years did not work out too well, but that does not mean the decision to do so was poor. Inferring that they made a mistake may cause investors not to invest going forward, and this would be a mistake. Over the long haul, substantial evidence indicates that broadly diversified and regular investing in productive enterprises increases wealth. However, how one does so may change.

Some investors have learned that their risk-tolerance is not as high as they thought. For those clients, new products or services may be in order. Structured products with downside protection (e.g. principal protected notes), annuities, or portfolios including diversification beyond the standard long-only style box coverage may give some investors peace of mind and the courage to continue investing.

Asset managers and advisors recognize that investors are emotional. It is human nature to blame decision making for poor results; this minimizes the role that risk plays and leaves us feeling more in control of our destiny. But our rational mind knows that randomness plays a role in determining outcomes.

Therefore, if asset managers and advisors want to continue to thrive, they need to convince people with assets that investing still makes sense, and that investing the last ten years was a good decision with a bad outcome, not a bad decision. Only after making a strong case for their own trustworthiness and the sensibility of investing at all will asset managers and advisors be able to move on to discussing their particular products and services.

Embracing Change: If I can Twitter...

by Deb

For all of you that have received hundreds of emails from me over the years, you know that I am sold on the benefits of email and the cutting-edge technology of my Blackberry. However, as the newest member of the kasina team, probably the least tech savvy and certainly the least likely to figure out my own iPod, I have spent a lot of time getting up to speed on many new Web 2.0 technologies. I am learning a totally new vernacular including such new buzz words as: Skype, Twitter, IM, wiki, etc. "What are these tools and how could they possibly help build relationships?", I thought to myself. At first blush, it seemed counter-intuitive to me that any technology could enhance the value of human contact. How could you replace the value of the face-to-face meeting or the phone conversation?

At kasina, we are spending a lot of time focusing on the ideal balance between external, internal, hybrid, National accounts, and Web touches for an asset manager - a formula that reduces costs yet maximizes the asset gathering proficiency of your advisors. The Web, and Web 2.0 tools, are proving invaluable to asset managers - oh, and to me too. Many of these new tools, which initially seem impersonal, are exactly the opposite - they enhance your connections and lower your costs. For example: sitting on an hour-long teleconference call will challenge anyone's attention span. Attending the same call via Skype is an entirely different experience, and one that is much more productive. The attendees are engaged in the meeting and can see the always-valuable facial expressions and body language of the other attendees.

My advice for wholesalers on the road? Start out using Skype to keep in touch with your family. Then imagine how useful it could be with your customers too.

So your next "email" from me may come on Facebook, LinkedIn, or even Twitter. If I can do it, so can your wholesalers.

Targeting RIAs

by Michelle

In August of last year, just before the market collapse, we discussed the growing RIA segment in our Industry Analysis. Discovery Database research showed that between 2006 and 2008 there was a nearly 200% increase in assets under management by RIAs.

Given this growth, we wrote, the introduction of particular Web site elements can help effectively target this group online. Features such as clear platform markers, targeted share class information, dedicated RIA service centers, and sales team maps can go a long way in demonstrating dedication and creating loyalty.

Now, as everywhere, substantial revenue losses are occurring within this segment, a recent Ignites article reported that RIAs are interested in ideas of how to better manage their business.

It is now even more important than before for firms to recognize their clients' plights and provide timely and tailored materials, be it through customized RIA Web features and online offerings, or in person, through true business building support in place of irrelevant product pitches.

Irrationality and Investor Decision Making

by Corianna

Check out Dan Ariely's presentation (see this link; you have to select Ariely's name from the "video" dropdown). And no, this isn't just because he's on faculty at my alma mater.

Here's why Ariely's presentation is worth 20 minutes of your life: Ariely's work is about human decision making - the driving force behind our economy, and the current economic crisis.

In his presentation Ariely describes how people's decisions are affected by the structure that their options are presented in. For instance, in one study researchers found that, when confronted with a simple decision - delay a scheduled surgery to see if ibuprofen would solve the problem, vs. perform the scheduled surgery - doctors are likely to act "rationally," and chose to delay the surgery. However, when the decision circumstances become more complex - delay the surgery to test for the effectiveness of ibuprofen and an additional medication, versus going ahead with the scheduled surgery - doctors chose not to delay the surgery.

So, why does this matter to asset managers? The key to surviving this crisis will to understand and anticipate investor decisions, which are not always rational. It's a well accepted fact that the structures of 401k plans (for instance, automatic enrollment), have a dramatic effect on levels of participation and the quality of investment decisions made by participants. Now is the time to take these lessons further.

Americans Want to Talk About the Financial Crisis

by Corianna

People want to talk about the financial crisis. Communication is key. We've been talking about it and blogging about it for months now.

Last week, some new numbers from Pew affirmed the importance of everything we've been saying. According to Pew, Americans:

• Are beginning to hear good news: Compared to December, the number of people saying they are hearing mostly bad news has dropped from 80% to 60%; meanwhile, the number saying they are hearing a mix of good and bad almost doubled from 19% to 37%.
• Want to know what's going on, good or bad: 91% of Americans following economic news very closely report feeling better because they know what's going on; whether or not it's good news. 79% of Americans who follow less closely feel the same way.
• Feel under-informed: 40% of those following the news closely feel they don't have enough background knowledge; 54% of those following less closely share their sentiment.
• Care more when they make more: 83% of Americans with household incomes above $75,000 and 64% of those with household incomes of less than $30,000 say they need to stay abreast of economic news for financial reasons.

In today's scandal-stricken world, asset managers must not take their positions as trusted investment consultants for granted. People want information, and more of it; no huge surprise there. However, with the ever-expanding blogosphere and a plethora of news publications, the competition for investor attention is intense. Today, more than ever before, transparency, easy access, and timely publication will be paramount. Asset managers would do well to go to their audiences through syndication (e.g. disseminating content through other sources; having portfolio managers featured on news shows, etc.) and new media communications, rather than waiting for investors and advisors to come to them.

2009 e-Business Budgets Take a Hit

by Johanna

e-Business and e-Marketing teams at asset managers haven't escaped the consequences of the recent market crises.

Out of 18 asset management firms that kasina surveyed in 2009, 67% are seeing decreased budgets from 2008 to 2009. Some firms are being hit especially hard: almost 30% of surveyed groups have had to cut their budgets by over 50%.

Despite this grim picture, the good news is that most teams have maintained the number of staff dedicated to the intermediary channel, and 2 firms are actually increasing their team size in 2009.

However, e-Business leaders aren't throwing up their hands and giving in, and we can look to many new innovations online in 2009 and beyond. In fact, 25% of firms are working on site redesigns, and an additional 39% of firms are working on enhancements to site content in areas such as education and value add.

Furthermore, at many firms, marketing groups are focusing on lowering costs by decreasing the amount of print advertising. Correspondingly, e-Business leaders are focusing on providing more effective online delivery services via e-mail and other technologies, such as RSS.

Stay tuned, in the upcoming months kasina will debut a new research report on how firms can leverage the Web for cost effective distribution. In this report we'll provide guidance on how firms can maximize precious resources.

Investment Firms Are Hurting Investor Confidence

by Lee

Today, Ignites had the results of a poll that asked readers "What has hurt investor confidence most?" The top answers were "rising unemployment/weak economy" (53%) and "dismal markets/reading 401(k) statements" (34%). While those are certainly real factors contributing to diminished confidence levels, I think that the Ignites poll missed a key factor in poor investor confidence: the lack of effective, proactive messaging from product manufacturers and distributors.

As an example, look at nearly any company's investor Web site: Fidelity, John Hancock Funds, Pacific Life, Vanguard, etc... (I don't mean to pick on these firms -- I could have chosen from dozens of companies).

While all of these firms provide in-depth information for investors about the firm and its products, as well as valuable educational information and even insightful market commentary, none of them have tailored their messaging to prominently address the questions that are foremost on investors' minds -- What is going on in the markets? Is my money safe? Am I doing the right thing?

Investors are shaken and most firms are putting their heads in the sand like a scared ostrich or allowing too many simultaneous messages to dilute a key point. This is not a time to hide or to mince words -- it is a time to clearly and forcefully state why investors should trust your organization with their money. Look to firms like BlackRock, MFS, and Putnam for examples of proactive messaging aimed to restore investor confidence. Get out there and communicate your story!

Compensation for the Long Term: Not Just for PMs

by Mike McLaughlin

David Kathman over at Morningstar wrote an interesting article this week about portfolio manager (PM) compensation. In short, Kathman lauds firms who align PMs with long-term performance and shareholder benefit.

The faculty of New York University, in their Restoring Financial Stability whitepaper series, applies the same concept to compensating executives and "risk-takers" in financial services companies.

The issues raised by both Morningstar and NYU have parallels within distribution, specifically for wholesaler comp. Wholesalers clearly fit the "risk-taker" label, and yet, for most firms, their pay is largely a short-term vehicle. Consider:

1. Monthly commissions condition wholesalers to think short-term. If I had a nickel for every wholesaler I've heard mourn the haircut in his monthly commission check over the last few months, I'd fear not the financial crisis.
2. Deferred compensation plans industry-wide are generally weak. As we've written, deferred packages for externals often comprise 10-15% of total comp. This enables good wholesalers to move liberally when better near-term opportunities arise.
3. Wholesalers face no direct financial penalty for bad outcomes for the advisor and shareholder. An underperforming product takes time to reveal itself after a purchase. And the wholesaler has the market and the PM to bear the brunt of the responsibility. By the time a relationship dries up, the commission check has long-been cashed, new relationships forged, and maybe even a new job found.

The idea of going more long-term got me thinking about a client of ours. They had a unique structure for wholesaler comp: base salary and an annual bonus. Monthly commissions? Nope.

As you might guess, the sales team was not boisterous in its support for this strategy. And at first I sympathized with them. But I now think the firm was more right than wrong here.

Sure, the firm had the substantial challenge of being an outlier in an insular industry where non-standard approaches are met with great skepticism. But they were attempting to plant a longer-term mindset within the sales team. That is a strategy I can support.

So what new ideas are out there for creating better comp structures for the long-term? We are all ears to hear yours, and we'll throw out a few of our own next week.

Blogs Within Asset Management

by Anu

For over two years, kasina told clients to consider using blogs for disseminating insights, both internally and with clients. Often, we're met with keen interest and little use. Our e-Business clients cite regulatory precaution that stops the development of a blog.

Well, in recent meetings with three different firms, e-Business executives shared 2009 online initiatives. In all cases, blogs were cited as key projects. Two firms asked to remain anonymous and they are using blogs in an unprecedented manner to further integrate Sales and the Investment Team. No doubt, these sales forces will answer advisor questions faster; wholesalers will make more needs-based assessments (an important insight from kasina's most recent report); and investment teams will feel less removed from the hand-to-hand combat facing wholesalers.

At Fidelity, the new advisor portal will provide a blog - though controlled - to registered advisors. The firm plans to start with content about the firm's investment philosophy in the blog, and then move to product information and commentary. E-Business has compliance approval for the blog, and will have a compliance/legal review processes in place. Compliance/legal will review all posts before posting onto Fidelity.com.

What's your next move? How will you close the gap between the Investment teams and your sales force and end-users?

Staged Mourning and the Asset Manager Marketing Challenge of 2009

by Corianna

In her 1969 book On Death and Dying, Elizabeth Kubler-Ross identified five stages of mourning:

• Denial
• Anger
• Bargaining
• Depression
• Acceptance

A notable study, done at Yale in 2007, challenged Kubler-Ross and found the cycle to be denial, yearning, anger, and depression. It notes that acceptance--the final end state--increased throughout the mourning process.

Either way, I've recently noticed a growing number of angry, let's-take-revenge-on-Wall Street headlines. It seems like the initial shock and panic are slowly morphing into anger. As this continues, calming panicked clients will no longer be as pressing as it was four months ago. According to mourning stage theory, anger, frustration, and depression will trump shock. Advisors and asset managers should prepare to deal with consternated, blue clients. And, for asset managers, the marketing challenge in 2009 will be developing campaigns that appeal to clients at all stages of "mourning."

Twitter comes to Asset Management

by Anu

Twitter began in March of 2006. In two years (only had data up to March 2008), the service has gone onto significant success with nearly 3 million "tweets" each day.

Michelle already brought up twitter versus yammer last week.

This week, kasina joined Twitter at http://twitter.com/kasinaUS. Visit and "follow" our tweets as we share insights from consulting, research, and beyond. We look forward to fellow "tweeps" "nudging" us. If you have any questions about how to use twitter and want to start with an e-mail, send your question along.

Happy New Year

by Steven

I hope all of you had some time over the holidays to catch your breath. I caught mine in Chile, enjoying the beautiful climate and wonderful wine. But, coming back to NYC has not been easy. The financial climate has not gotten any better and the industry is still facing major obstacles. Here are my thoughts on how the current crisis is transforming our industry's distribution landscape:

Peer Pressure: Tell Advisors About Their Peers Online

by Johanna

In Steven's recent blog post "Understanding Independent Financial Advisors Can Stem Redemptions," he noted the success wholesalers have had with bringing advisors together. As he noted, this is particularly effective in the independent channel, where many advisors lack the support of a large network of their peers. It's been a common theme in kasina's research: advisors want to know what their peers are doing and thinking.

I recently came across a way one asset manager is bringing advisors together online, and spurring interest in online content at the same time. This firm sends out an e-mail every month with an overview of the ETF market, including asset growth and other information. The message also includes a link titled "See what information other investors are looking for." Clicking on the links takes users to a landing page with bar charts detailing the most downloaded factsheets and educational documents for advisors. In looking at these charts, I immediately wanted to look at the most popular items to see what advisors were so interested in. The firm makes it easy to do by hyperlinking each bar in the charts to take users to their advisor site, so they may more closely review the documents.

It's unlikely that asset management intermediary sites will become social networking hubs anytime soon, but that doesn't mean that firms can't communicate to advisors about their peers. Working with Compliance departments and taking small steps - such as telling advisors what their peers are downloading - is a powerful tool for promoting the firm and its products.

Yammer vs. Twitter

by Michelle

In our November Industry Analysis, we wrote about the increasingly popular form of microblogging, Twitter. Twitter.com is a web-based communication tool in which users can describe their current status in short posts, or "tweets," distributed by instant messages, mobile phones, e-mail or the Web. It's geared towards individuals who want to share daily experiences, thoughts, opinions, URLs, etc. with their network. Twitter asks the question "What Are You Doing?" and user responses are sent to their "followers." Privacy settings allow for all updates to remain contained to that network, but only if each user checks that setting.

A newer service, that came on to the microblogging scene just as the piece on Twitter was being published, is Yammer.com, a similar tool marketing itself to businesses as a method of facilitating intra-firm communication.

Yammer has capitalized on Twitter's model, asking "What Are You Working On?" and providing a similarly lean space for users, and now, specifically, colleagues, to keep each other informed. While individuals can register and use the site, it is a for-profit entity, providing the opportunity for or entire companies to join for $1 per user per month. This gives the firm administrative control over security and how employees use the service. A recent New York Times article, "Will Microblogging at Work Make You More Productive?," states "In the first six weeks, 60,000 users have signed on, and 4,000 of them have convinced their companies to pay." Another article, "Twitter and Yammer Test Dot-Com Business Models," discusses Twitter's plans to introduce ways to bring in revenue, one of which is to charge companies who want to use it...as an official channel to talk with their customers and monitor what they are saying."

In making the case for Twitter, we discussed how the need for improved communication and distribution of information, both internally and externally, is an ever-present challenge for many asset managers. Wholesalers are notoriously brief in their messages and microblogging, by nature, allows for nothing but brevity, providing a space of 140 characters maximum for user updates. In that way, it is already present in the space, in the form of short, rapid-fire email messages that go back and forth between various sales groups. What's more, the use of BlackBerries and other smart phones has increased dramatically in the past several years. Be it Twitter or Yammer, microblogging and its potentiality for fast, wide-spread communication is starting to make more and more sense.

Understanding Independent Financial Advisors Can Stem Redemptions

by Steven

Redemptions in mutual funds are expected to surpass $325 billion in 2008 and asset managers have started to focus their distribution strategies around the growing independent channel for salvation.

There are many reasons why it makes sense to focus on independents. One of them is lower redemptions. The average redemption rate in the independent channel has been between 10 and 15%, as compared to 20% in the wires.

But our recent focus group with independent financial advisors has shown that they are frustrated with the lack of understanding that wholesalers and marketing organizations have about their business. At the same time, interviews with some of the leading independent advisory firms have revealed that successful wholesalers understand the difference between independent and wirehouse advisors.

One of these differences is that independents typically do not have the support of an advisor network. Wholesalers that understand this have organized events where independents (often from the same firm) get together to share best practices. These events have been highly successful both for the advisors and for the wholesalers.

Two steps that firms can take to better understand the needs of independent advisors are:

• Conduct Regional Advisor Focus Groups
  These focus groups can help firms understand the varied sophistication levels and preferences of advisors.
• Capture Key Data Points
  Capture key demographic, behavioral, and attitudinal information (Service by Segmentation) such as:

1. Demographic Data
• Maturity of the practice
• Team or individual practice structure
• Number of clients
• Revenue structure
• Licenses and designations
2. Behavioral
• Accepted calls from an internal wholesaler in last four quarters
• Meetings with an external wholesaler in last four quarters
• Open and click-through rates for e-mails
• Literature requested through each communication channel (Web, e-mail, telephone)
3. Attitudinal Data
• Rating of value-added programs
• Willingness and frequency to receive calls from Internal sales
• Willingness and frequency to meet with a wholesaler
• Rating of conference and networking events
• Preference to have firm information pushed to them (via wholesaler, marketing, or Web)

Redemptions are going to continue to plague asset managers and insurance companies. Better understanding independent advisors will help your wholesalers and marketing departments have more relevant and meaningful interactions, which will ultimately help with redemptions.

The New Fidelity.com

by Michelle

On Wednesday, a few of us here at kasina got a sneak peak at the new Fidelity.com, which will roll-out in installments over the next 6 weeks. The completely redesigned site is the product of extensive research conducted by the firm, which suggested that investors are demanding more market news and analysis from asset managers.

Two years in the making, the new site still contains the information about Fidelity and the firm's products and services for retail investors, but it also seeks to function as a news portal, providing articles and video on breaking news in and out of the industry.

The site's homepage is divided into sections, including daily highlights, personal finance, investing tools and tips, a play & profit area, and more. With a long layout, requiring users to scroll down to view content, the new Fidelity.com directly resembles news sites such as CNN, Marketwatch, Yahoo finance and others. While some articles and analysis are produced in-house, the site also highlights syndicated content from 20 leading industry publications, to round out points of view offered.

In our increasingly news-centric culture, the ability to get breaking updates without leaving the Fidelity domain seems particularly timely. While this level of redesign may not be appropriate for most firms, we're excited to see these new, innovative features.

Social Networking to the Rescue

by Anu

It's a nasty, cold Saturday in Brooklyn. A friend is visiting us and needs to visit someone in Queens. She has already had a difficult trip to us from Midtown Manhattan due to "some delay" with the subway at Chambers Street. As she readies to brave the weather, my wife offers, "Anu can look on-line and see if there are any delays."

In the old world, my search focus would have been on the mta.info site.

But in today's world, my search led me to Twitter. The introduction of child 3.0 in our household further knocked off some leisurely pursuits (don't worry - the beer is carbonating and the bread mother is alive), one of which was exploring random, fun sections of the World Wide Web.

So I'm a relative newcomer to Twitter.

I found a Tweet to "follow" that sounded promising. I "followed" it (that means to get updates when a new tweet is posted) and saw that the "some delay" at Chambers was due to "smoke on the tracks." And just 7 minutes ago, someone posted that the Lexington lines were running slow due to a sick passenger. I was able to re-direct her and save somewhere between 10 and 30 minutes from her trip.

Just because I'm curious, I went back to the mta.info site to look for service advisories. Last one posted: Wednesday! Score 1 for the power of the human network.

R.I.P SearchMash

by Anu

A week ago, Google sent SearchMash, the little known, but oh-so-powerful search engine "the way of the dinosaur."

Within SearchMash results, users could answer Yes/No to whether the results were valuable. I don't know why I would answer this, but I did and pretty often.

So, what did Google learn from SearchMash? There's power in ascertaining micro-feedback (coined right here) from your users. In fact, there's so much value in it, that Google took the feature from a site NOT EVEN on Google Labs and put it right on the flagship property. As you see below, all logged-in users will see two new icons, begging the question, "did we do a good job?"

Are you asking advisors if you did a good job? If not, why not? Let us know by posting a comment.

Presentations on Why e-Business is Sales, and Sales is e-Business

by Mike Ma

I've made this point many times, but I wanted to share some recent client presentations that demonstrate clearly why now is the time for e-Business initiatives, not retraction.

Let me know if you'd like me or someone from kasina to talk you through these points.

Wirehouse and Independent Advisors Speak Out At kasina e-Business Roundtable

by Johanna

One trend both Steven and Lee have talked about a lot recently is the changing make-up of the advisor universe. Essentially, as the wirehouse channel becomes more consolidated many advisors are opting to go independent.

During the kasina Fall e-Business roundtable in New York on November 12 - 13th, we hosted a focus group of advisors, two of whom were independents and two from the wires. When asked about their decision to join that channel, the independents said:

• "I feel like I have total freedom. I feel like I can structure my whole practice and life to be what I want it to be. I went into it kicking and screaming, because I did very well in the corporate world, but now I can't picture anything else."
• "We have a level of flexibility that advisors are wirehouses don't have. We essentially own our books. Directly or indirectly, it almost feels like we have more skin in the game. At some point I can sell my practice, so our clients are extremely important because they're our clients but they also have a monetary value to us."

Keys to serving this group online? Targeted and effective e-mail campaigns and truly forward-looking commentary from portfolio managers.

In talking to the wirehouse advisors, it became clear that asset managers need to pay attention to how their groups are structured. One told a truly tragic tale that explains why many advisors don't give wholesalers the time of day:

• "A lot of wholesalers haven't figured out that there's just one person that they should be contacting on the team. It's really annoying when everyone gets the same call... I do try to let people know when they are calling the wrong person. Understanding team structures will become more and more important because there is a trend towards TEAMS, and wholesalers with an understanding of how my team works means that they will be more likely to do business with us."

Keys to serving this group? Collect and act on information about how advisors' offices are structured. If particular advisor teams include product specialists so wholesalers can better target their service and sales efforts, notes to that effect should be in the CRM system.

Twitter for Asset Management, Are You Kidding Me?

by Steven

When I first heard about Twitter - an online tool for instantly sharing short updates and following others who do the same - I wondered who would ever want to do that, and thought it would be a waste of time. But I've been testing it out for a while now, and after listening to some of the discussions at our recent e-business roundtable, I reconsidered, and realized it could be a great internal tool for wholesalers and national accounts managers.

How Does Twitter Work?

Twitter users have 140 characters to answer the question, "What are you doing?" If you join Twitter you can "follow" others who also post. You can also direct message them, but always in 140 characters or less. Twitter interactions can be viewed and updated on the Web, through desktop apps, and on mobile devices. It's a way to quickly share information without having to send mass-emails.

Twitter for Wholesalers and National Accounts Managers (NAM)

Simply speaking, Twitter is a communication tool. Wholesalers frequently talk or email each other about successes they had with an advisor or a fund that they tried to promote. Rather than sending these successes as a long sentence or comment in the header of the email - I know you guys do that - wholesalers and NAMs could use a tool like Twitter to post these successes and follow them throughout the day.

The advantages of Twitter over email are:

• Every wholesaler in the organization has access to it


• Stored in a central location


• Searchable for future reference


• Limited to 140 characters to ensure concise messaging

If you're still wondering whether asset managers would really find this useful, I would suggest testing it out. This quick and easy service could provide a leg-up for the next generation of successful and progressive wholesalers and NAMs who depend on networking and the internet to facilitate communication.

Roundtable Wrap-Up: Network the World

Editor's Note: Today we have a guest blogger, David Berkowitz, Director of Emerging Media & Client Strategy at 360i, a leading digital marketing agency.

by David Berkowitz

Last week at kasina's Fall e-Business Roundtable I facilitated a discussion about the future of e-Business and online networking tools. There were two big questions that came out of the session that I thought might be valuable to post up here on the blog.

The first was a question about communication in the B2B environment, specifically which method I would recommend firms invest to get the most bang for their buck:

First I'll go with the easiest answer: listening and buzz monitoring. It's the easiest thing to do, and it's what needs to come before everything else. Try searching Twitter for your company name, a competitor, a stock symbol, or a hot topic in your industry. Look at FriendFeed's public timeline to see what early adopters are posting all around the Web. Run searches on social media sites such as digg, YouTube, and Facebook, and on buzz monitoring and measurement sites like HiveSight, Blogpulse, and Google Insights for Search. Any and all of this can provide valuable information about your customers, competitors, and business, and then you can figure out how to take action on those findings.

As far as communication, I'd start with blogging. It takes time to do it well, and it requires a commitment, but it can also develop into a valuable communication channel. It's also a great way to give a business a more personal voice, even if written in a professional manner. With the tone, you want to write like you're talking to a client over coffee - you still will want to watch what you say and how you say it, but you're treating the listener as a human being, someone you want to engage and build a relationship with. Blogging is also a gateway into an entire community of other bloggers, so it can lead to deeper relationships on a number of levels.

The second question was whether marketing dollars will shift from off-line executions (i.e. magazine ads, direct mail) and into social networks in 2009.

I see marketing dollars will shift more from offline to online media as marketers demand better targeting and more accountability from their advertising. Social networks should have a mixed bag of success in the year ahead. On one hand, much of the flow to online in 2009 will go toward the most efficient direct marketing channels, including search engine marketing and various forms of behavioral targeting. The recession will add to the pressure to demonstrate ROI next year, so search engines will benefit even more from this. Yet social network marketing will continue to grow for a number of reasons:

• Most marketers still include it as part of an experimental budget, so there's a lot of room for growth, even among entertainment marketers and others who have flocked to it early.
• Usage of social networks continues to rise, and it's now a major driver of Internet usage. Reports now say social networks are even more popular than porn. Ad dollars need to start shifting to where the users are; they're not always searching, and advertisers need to create demand at earlier stages of the funnel.
• Ad targeting options keep improving on the major social networks (MySpace and Facebook), along with other social media sites and networks such as YouTube, BuzzLogic, Meebo, and SocialMedia.com. There are many businesses out there seeking to improve on and better demonstrate the value of social media as a marketing channel.

Never Allow A Crisis to Go to Waste

"Rule one: Never allow a crisis to go to waste" - Rahm Emanuel

By Steven

The industry has already lost $1.3 trillion in assets under management in the first three quarters of the year. Distribution teams are responding by cutting the bottom performing wholesalers. Organizations are taking this opportunity to reassess their wholesaler territory strategies, and focus on understanding the difference between overall territory potential and the actual impact of the wholesaler. Understanding this difference is fundamental to a successful wholesaling strategy.

To better assess territory and wholesaling potential, we recommend that firms:

• Acknowledge that the territory and the wholesaler are not one and the same - 50 percent or more of incoming assets within a given territory may be derived from advisors that the wholesaler has never actually engaged.


• Apply more rigor to the analysis of wholesaling opportunity - Firms can incorporate information from National Accounts and supplement it with data from outside vendors, such as Coates Analytics, IXI, and Discovery Data.

Once firms understand the underlying potential of their territories, they need to improve upon how they evaluate their wholesalers. We found that the following steps lead to success:

• Compensating for wholesaler alpha - Pay wholesalers for lower-than-average redemptions in their territories. This can be done simply by taking the average redemption rate for the firm and paying wholesalers that have fewer outflows then their peers.


• Matching the wholesaler evaluation metrics to the sales goal so that both are grounded in wholesaling potential - Separate assets derived through wholesaling contact from those acquired without wholesaling contact. Pay only on the assets that wholesalers influenced.

87 percent of Sales managers do not know the percentage of assets coming in through a given territory that results from the efforts of wholesalers. This is often the cause for underperforming Sales teams. Take advantage of this crisis by redesigning your territories, and reevaluating the way you measure and compensate your wholesalers.

Blogging - An Idea Whose Time Has Come

by Anu

A few weeks ago, Corianna and I were visiting a client via a short flight from JFK. As I take off my shoes and unload my laptop, I see this sticker (sorry for the poor quality photo - I have a hard enough time getting through security, anyway.)

If the TSA (that's the US government, people) is driving customers to use a blog, shouldn't we be able to figure out a compliant method to provide advisors a blog? Rather than going it alone, this seems like an idea that a consortium should present to FINRA. Let's discuss further on the kasina forum.

More Bang for the Buck

by Anu

At the NICSA Conference last week, I was asked to moderate a fantastic session with 4 of my favorite e-Business leaders (no, really. To prove it, 3 of the 4 ended up eating ice cream with me at 2 am that night). Our topic was Getting More Bang for the Buck (PowerPoint) - how to maintain an e-Business edge in the face of low-budgets. Of the 50+ session attendees, we had a robust Q&A.

Here are four fantastic ideas:

• Use internal groups to assess usability (try things like card sorting)


• Build requirements for future projects to reduce time-to-market when budgets are better


• Re-visit vendors to learn about new products and features


• Be even more cost-effective with e-mail campaigns by being selective

I'd love to share more, so if you're interested, feel free to comment below.

From Many Come Ten

by Anu

This month, kasina released "Top 10 Institutional Web Sites for Institutional Investors." In our first review since 2006, the data revealed significant progress. Then, many firms maintained a one or two page brochure about their institutional line of business. Now, our research revealed three key findings:

• Institutional clients and consultants expect the ability to access data on-line. EXPECT. This is no longer a nice to have, but an expectation
• Institutional web sites will play a role in winning RFPs both today and in the future
• Institutional web sites will only be successful if the relationship management is well-trained and ready to direct users there.

There is tremendous discrepancy within our Top 10 sites. The 10th place firm scored 52% of the top firms. Therefore, there is significant opportunity for other firms to jump right into the foray and place in the next ranking.

In the high-tough, high-margin institutional business, firms are creating a world-class client experience to compete and win business. Winning one additional small mandate (e-mail me for the math) results in over $1MM of revenue.

E-mail us with questions or thoughts about the institutional client experience. Or better yet, use the kasina forum to post thoughts and questions.

The Top Ten Shake-Down

by Anu

2008 marks the release kasina's 10th annual Top 10 Web Sites for Financial Intermediaries report. Just think for a second, what aspects of the web weren't in existence ten years ago:

• Google - incorporated 1998
• MySpace, Facebook - 2003, 2004
• The Blogosphere - coined 1999
• Wikipedia - 2001

At the same time, think about how long it feels like some of these integral web technologies have been around (ask a college student to try imagining the world sans Facebook). For ten years, web users have been rapidly evolving, and firms strain to keep pace. This year's study identifies and highlights those sites which set the pace for their peers, those sites which best managed to service advisors' needs while elevating expectations through continual innovation. Notably, this year saw:

• Fidelity re-design its already T10-caliber site, buffering its unparalleled granularity of data with smoothly integrated product, literature, and value-added functionalities
• DWS launch a completely overhauled, Flash-based site, establishing its site as, technologically, the industry's most advanced

A significant shake-up took place in the rankings as four of the top ten have completely re-designed in the past year and as sites continue to leverage new technologies to service advisors in more effective and efficient ways. At kasina, we're looking forward to discussing the insight gleaned from this year's report with all of our subscribers. Use our industry forum to continue the dialog.

What Makes a Good ETF Site?

by Johanna

During the research for the 2008 Top Web Sites for Financial Intermediaries report, I had the opportunity to review a number of prominent ETF provider Web sites, which got me thinking: What are the important differences between ETF and mutual fund (or other product)-focused Web sites? How does the criteria for an excellent ETF site differ from other types? A few key distinctions came to mind:

Importance of the Index: In addition to including information about the past performance and the goal of the ETF, it is also important to provide in-depth information about the underlying index. For example, Van Eck has a section within each product profile dedicated to index information. Especially with more products and varied product themes, understanding the inner workings of the underlying index becomes important for transparency and product differentiation.

Retail and Intermediary focus: Few mutual fund advisor sites have a section dedicated to "What is a Mutual Fund" or "Mutual Fund 101," even though this type of basic education is important for investors (who are an important Web audience). Furthermore, for newer products within the ETN space, the basic product education becomes paramount because many advisors really don't know what ETNs are or how to use them effectively.

Data Availability: Some mutual fund-focused firms pride themselves on the historical breadth and depth of pricing and performance information. On some sites, advisors can choose the historical time period to call up whichever combination of information data a decade or more back into the past. What about ETF sites? Given that the surge of product development didn't really get into full swing until after 2000, historical information really won't help. Instead, ETF sites do (and should) focus on presenting the data they have in interestingly visual ways. For example, ishares.com has charting tools for index error tracking.

Of course ETF Web sites cannot simply focus on the differences in products and audiences. Universal characteristics such as comprehensive site search and intuitive navigation, in addition to detailed and comprehensive content, are mandates for all product provider Web sites.

Web Writing

by Mike McLaughlin

My last blog post.

It was chock-full of links, bullets, and short paragraphs. Unfortunately, though, no bold text.

Did it attract your Lazy Eyes?

That link is the reason for this post. It's a good and interesting reminder of how people read, and therefore need to write for, the Web.

Even the comments are good, though one commenter might have me boiled in oil for writing this paragraph.

If you're not up for it, two things you should know:

• Jakob Nielsen would find me shallow right now, and
• You missed another opportunity to get Rickrolled.

Net Promoter Score for Wholesalers

By Steven

Wholesaler performance is easily measured by looking at incoming sales. The difficulty lies in determining a course of action when both performance and sales are low. How can we judge whether the problem rests in the wholesalers and their processes, or if the products themselves are impeding positive sales?

As the result of recent discussions with our clients, I have started to judge wholesaler performance using more than the obvious metric of sales performance. I have also begun asking advisors this question: How likely is it that you would recommend the wholesaler to a friend or colleague?

The responses to this single question generate a Net Promoter Score, a concept that was first introduced in a 2003 article in the Harvard Business Review. Based on their responses to this question, customers are categorized into one of three groups: Promoters, Passives, and Detractors.

Promoters are valuable assets. They drive profitable growth through repeated or increased purchases, loyalty, and referrals. Detractors, however, are liabilities. They destroy profitable growth with their complaints, reduced purchases, defection and through negative word-of-mouth.

The Net Promoter Score is calculated as follows:

% of Promoters - % of Detractors = Net Promoter Score (NPS)

In this volatile market environment, the Net Promoter Score can effectively measure and motive wholesaler performance.

Taking a Chance on the Web

by Anu

In our study, "Your Site Can Sell, Too," kasina surveyed advisors across channel and demographic data. Across channels, 15% of advisors said they preferred to use electronic communication in lieu of Wholesaler interaction. Did you hear that? Some advisors do not want your Wholesaler to visit! They are asking you to save your money and frustration.

But are firms listening? In subsequent conversations, few firms are considering wholesale (yes, pun intended) changes to the service model for 2009. A simple idea: test your online power. Gather all the advisors that you did business with in 2008. Then find out which ones used the Web 'often' (I'll leave that for a later debate) and were visited by a Wholesaler. Select a group of one hundred advisors from this list. Don't select the advisors most desired by Wholesalers. Don't select advisors that are prime candidates for your revolutionary focus firm strategy. But do select a hundred advisors and, in 2009, don't visit them.

That's right. Don't send a Wholesaler to visit them. Continue building great online tools and providing commentary. Please send them valuable, timely e-mails (oh, and very few of them, if you will). In July, review the production for those hundred advisors. If the production was significantly lower than the other population, premium coffee is on me. If not, I'm expecting you to pick up that cup.

I'm already looking forward to that Iced Yirgacheffe.

IT Credibility

by Johanna

When it comes to the expertise needed on e-business teams, skills that come to mind immediately include:

• Understanding of the business
• Liaison with sales
• Writing for the web

Absent from this list is IT expertise. e-Business teams today do a balancing act between Marketing and IT, and many are closer to marketing than they are to IT. Some could even be called Web marketers, not technical Web developers. The implementation aspects often fall to IT, and e-business focuses on having a good relationship with IT.

What does it mean to have a good relationship with IT? kasina has spent the past few months envisioning, developing, and implementing a Web forum where our clients post questions and engage in a dialogue with each other, and with us. As an observer of the building process for the forum, I gained a new perspective on the development process needed for the Web.

Within kasina we have computer science degrees, IT backgrounds, and on-the-job experience in dealing with the nitty gritty of technical Web site development. Personally, I have a background in finance and economics, and on-the-job experience in strategic planning research and consulting, which means I have little credibility with IT and Web developers when discussing time and effort. For example, when our outsourced IT partner quoted 3 days to enhance the forum, it was extremely valuable to have a colleague who knew that the changes should only take 1 day (actually, it should've taken 20 minutes). "A good relationship" with IT, coupled with a more in-depth knowledge of the technical aspects of the Web, meant that he could call them back and demand a faster turnaround.

While e-business still needs to answer to the business units and senior executives, and should avoid doing technical implementation better left to IT, having expertise on e-biz teams at both a strategic level and a technical level would allow the group to better succeed in the balancing act.

Wholesaling Darwinism

by Mike Mc

The lead story in Ignites from Monday, Wholesalers Face Scary Scenario as Advisor Ranks Fall (subscription), paints a grim, challenge-laden picture for today's sales organizations. The advisor population is shrinking; the average wholesaler lacks experience; the sky is falling.

It seems that rarely a day passes now where one wholesaling apocalypse or another isn't upon us. We sometimes dabble in it ourselves.

But lost amidst the constant rhetoric -- if I never read another article about product pushing externals, it'll be too soon -- is the fact that wholesaling is entrenched as part of distribution. It's here to stay.

What's more important (and more interesting) is how wholesaling is evolving. One such evolution, hybrid wholesaling, continues to be a dominant topic with our clients.

Like a fund reaching its 3-year anniversary, hybrid implementations industry-wide are finally establishing an identifiable track record. So, are hybrids here to stay, too?

We'll be releasing a full report on this later in the month, but early returns indicate that the answer is a resounding 'yes'. Based on our analysis, here are three key reasons why:

• Profits: for the vast majority of firms, hybrids have enhanced the profitability of their sales efforts, in some cases by more than 5%. In our research, no firms have indicated a decline in financial efficiency.
• Reach: where hybrids are placed and who they target varies dramatically across firms, but they are almost always focused on unexploited pockets of advisors (by channel, by geography, by behavior). With 300,000 advisors out there, wholesaling has elements of a numbers game, making it increasingly critical to find those shadowy corners of the advisor universe.
• Lifestyle: as hybrid positions have become established, they have become an important alternative for individuals who want middle ground when it comes to travel, and for firms who want to offer careers to salespeople that do not require endless time on the road. With field time ranging anywhere from 20% up to 70%, a hybrid role can provide a range of lifestyle options.

Given costs that are roughly 1/3 as much as a traditional external, hybrids will continue to play a key role in wholesaling evolution.

The landscape is changing, but the sky is staying right where it is.

Redemptions a Problem? Internals, the Cure

by Mike Ma

"We are beating benchmark by 1300 bps and we are suffering net outflows!"
"How do we stem redemptions from products that have good performance?"

This first statement was said by a good friend of mine I am vacationing with who happens to be a portfolio analyst of a high-profile asset management firm. The second question was also brought up in a call today with the head of marketing from one of the top 10 asset managers in the industry (I am on a working vacation ... lovely!) -- Two similar questions in 12 hours, so I figured a post was in order. My answer to both --

The internals.

Get the internals out there more, but do it with more intelligence. Two quick tips and thoughts, in order of preference and effectiveness:

1. If you own their own transfer agent ... - One of our clients has used the internal desk to call an advisor when a redemption order came through. You have T+3 before settlement and I'd bet you will be surprised at how many advisors you can talk off the ledge.
2. Or else ... use the Web reports - If you know which products are on your watch list make sure traffic reports or downloads of information about those products are promptly and delicately followed up on with by your internal desk on a daily basis. I'd like to reiterate the word *delicately.* You don't want your internals to come off as big brotheresque; rather, have these advisors be put into a regular call pattern with regular leading questions.

This is a situation best handled by people who can readily get to wherever they are needed. Who better than the internal wholesaler?

We just have to give them better tools.

Investing in $ocial Networks

by Corianna

Cake Financial and SmartyPig are two social networking sites that have recently caught the attention of the press. The former is something along the lines of a huge online investment club allowing investors to track their portfolios, and the real time performance information of acquaintances and strangers alike. The latter lets individuals set savings goals and distribution plans and share them with friends, family, and loved ones.

On June 19th Cake Financial boasted the listing of over 5,000 new portfolios, and within two months of launching, SmartyPig had users in all 50 states. The success of these two sites suggests the turning of a new page in the story of online interaction. In particular, these sites:

• Excite competition between participants
• Allow people to learn from the experience of others
• Depend on people openly sharing financial information

The first two bullet points suggest that incorporating social networking capabilities into advisor sites might increase sales.

The third bullet point indicates that users are feeling more and more secure interacting and sharing personal information online. As users' comfort levels continue to increase, so will the demand for extensive online capabilities -- ranging from self-servicing tools, to ways to interact with others.

Making the Business Case for the Web

by Andy

One of the common frustrations of e-business leaders is that they are asked to demonstrate return on investment (ROI) on all web expenditures. For many years, e-business practitioners have been forced to rely on a steady stable of axioms to make the case for Web expenditures, such as that it supports brand, or that it is a must in this day and age. And while those of us who are close to the Web appreciated the truth to these assertions, what e-business needed was a focus on the business and elimination of the implicit pejorative the 'e-' implied.

Over the past several years a strong business case for the web has emerged:

• Advisors are demanding to interact and be serviced via the web.
• The competition at the top of this industry is forcing our firm to constantly raise the bar in how we evaluate the industry.
• Web use is positively correlated to gross sales.

The business case cannot be ignored. Customers want to interact with firms online, the competition is raising the bar, and sales can be positively correlated with Web use. The Web is no longer a perfunctory obligation, but a significant means of doing business, and, accordingly, a necessity of business itself.

Facebook Your Advisors

by Steven

Today a number of wholesalers are using Plaxo and LinkedIn to connect with their advisors. In the future, asset managers will have to figure out how to connect their advisors via social networking applications.

I maintain three blogs, have a Facebook, Myspace, and Friendster account, use LinkedIn and Plaxo, share my bookmarks through del.icio.us and Digg, share my photos through Flickr, Kodakgallary, and Facebook, as well as share my music and videos through Pandora and Youtube. Keeping all of this information up to date and organized has become a fulltime job.

Luckily, the future looks much different. All of the above mentioned sites will most likely be a part of the open source movement and I will be able to maintain just one application or site through which I will manage all social media applications. Sites like Plaxo's "pulse" are moving already in this direction. Anything put into Plaxo can be retrieved and used elsewhere, and any data made public will be accessible across the Internet. But, most importantly, they also enable various privacy settings to control how this data can be shared with business, friends, family, or nobody at all.

Plaxo Pulse shared feeds

What does this means for the future of asset management firms? Does it really make sense to create a wholesaler profile page that will be able to incorporate various feeds from places like Plaxo, LinkedIn, Flickr, and del.icio.us? Why would wholesalers want to be so transparent with their personal and professional information and share these updates with their advisors?

Well, I am sure you know a wholesaler like Joe who, when visiting with advisors, always shares his family pictures with his advisors. Or you know a wholesaler like Lisa who shares the latest article on the global economy through e-mailing her advisors relevant articles from the WSJ. Or you know an advisor like Frank who has a LinkedIn profile where he connects with all his advisors.

Asset management firms will have to figure out how to incorporate these into their Web site. As we have noted in our recent study "Your Site Can Sell, Too," of active producers who are covered by wholesalers, those who use the asset manager's Web site sell 25% more than those who don't use the site. Those asset managers that can figure out how to connect with their advisors through their site will ultimate increase this percentage the most.

iPhone - Re-envision Your Web Site Design

by Steven

All my friends have iPhones. I don't have one, and I have to admit that I am jealous -- at times I've even been a hater. The phone's interface is absolutely amazing; an interface that allows you to move and expand things with your fingers like that is not only going to be the future of mobile computing, but is going to change any computer interface. Imagine being able to truly interact with your computer the same way you would with your Lego blocks when you were a kid. This kind of interaction will help us be able to understand data in a much more intuitive way than through excel pivot tables. It will not require someone to be an excel maven to be able to analyze data.

Imagine the opportunity this presents to asset managers for investors and advisors. It will enable us to present data in a non-linear, visual, intuitive way: there will be no need to define variables that no investor can understand, and no complicated instructions on how to run a financial model. The popularity of the iPhone-like interface shows us that we can start designing Web sites that are truly visual and that take advantage of this highly intuitive interactivity.

To illustrate the future of computing, check out Jeff Han show off a cheap, scalable, multi-touch and pressure-sensitive computer screen interface that may spell the end of point-and-click.

(Microsoft will release this kind of interface technology in its Windows 7 version.)

I guess, then, in the name of progress and research, I will have to break down and buy myself an iPhone.

eBusiness, Baby-boomers, and the Fountain of Youth

by Corianna

A few months ago I came across Thrasher Capital Management's "Demographic Convergence Theory," or DCT. The Thrasher team is pioneering the DCT as an investment strategy for their fund, GendeX. The DCT is based on three principles:

1. Gen X- and Y-ers are enjoying increasing spending power.
2. Gen X- and Y-ers are trend setters, in the eyes of baby boomers.
3. Baby boomers want to stay young forever, and will use their spending power to emulate Gen-X and Y-ers.

Issues of spending power aside, one of the DCT's main points is this: baby boomers are open to new things. In fact, the DCT suggests that boomers are more than just receptive; while they may not be first adopters, baby boomers will eagerly use the technologies and gadgets they see younger generations embracing.

While the jury is still out on the merits of the DCT as an investment philosophy, the theory has some interesting general implications, corroborated by recent kasina research for the forthcoming report, What Advisors Do Online. In What Advisors Do Online, we found that while younger generations use the Web for more purposes than their elders, older generations are more active than many--including e-Business teams at asset management firms--might expect. For instance, there is almost a 20% gap between the percentage of 20- 40-year-old and 41- 60-year-old advisors using YouTube (younger advisors are on YouTube more). However, when it comes to using asset manager Web sites for product information, the gap narrows to 2%, with the older demographic reporting a slightly higher usage.

The DCT offers an explanation for these findings, and suggests that the number of baby boomers frequenting YouTube, reading blogs, and using Web 2.0 technologies will only increase as time goes on. e-Business teams and asset managers can take heart as they push forward with new online strategies: their work will touch both the young, and those who want to stay young.

Anyone have suggestions?

by Lindsay

Last week I played golf on a typical Florida course, wherein copious artfully placed, often hidden water hazards seemed to maliciously steal my perfectly executed (well, not quite) shots at every opportunity. As I was complaining bitterly about the clearly sadistic designer who had engineered this unforgiving course (forgetting, for a moment, that I was spending a long weekend in sunny Florida, while my colleagues were stuck in New York, staring at their computers), we drove across a long wooden bridge, traversing a large swamp between the 9th and 10th holes. In the midst of the reeds and about 15 feet from the bridge, was a box marked “Suggestions” perched on a tall wooden pole. It was clearly mocking us.

Golf analogies aside, the inaccessible "suggestions" box made me think about idea generation in the asset management industry, and how it differs from other industries. When executives at famously innovative companies, such as Apple's Steve Jobs, are interviewed, they often discuss the processes their companies have in place to encourage idea generation by employees at all levels. Tapping into the intellectual resources of all employees, rather than simply those employed in product development or creative capacities, they say, helps them continue to be thought leaders.

The asset management industry, on the other hand, often seems to employ a model more like the aforementioned golf course. Suggestions and ideas are nominally welcomed, but the effort that it would require to actually submit them (figuratively, swimming through the swamp and climbing the pole) doesn't seem worth it, so firms largely remain siloed, in this respect. I recently met with one firm that is taking small steps toward combating this issue. The firm has created a program through which its Product Marketing and e-Business teams actively solicit ideas from employees in call centers, and encourage participation by offering prizes for the best ideas. Anecdotal evidence suggests that the program has been successful, and that many ideas have been implemented since the program's inception.

Asset managers are often given a hard time for, with a few exceptions, playing follow-the-leader. For those who are not among the few industry leaders, tapping into the collective brain power of all employees could be a first step toward creating a creative, innovative culture and, ultimately, towared breaking from the pack.

Now's the Time to Go Global

by Steven

For firms that have yet to go global, the question is no longer a matter of if, but how. Successfully penetrating foreign markets, however, requires careful strategy and long-term commitment.

Depending on the size of the firm, global strategies may vary widely. Smaller firms ($100 billion to $200 billion in assets under management) may go the subadvisory route, for example, while larger firms (over $250 billion) might opt to establish a local presence through partnerships or acquisitions. Before sinking time and resources into foreign markets, firms must develop a strategic entry plan.

To start, U.S. players must build local expertise if they truly want to compete globally. Although many foreign markets are just starting to open up, the message is clear: Foreign investors have minimal demand for U.S. products. No matter the distribution strategy, firms must start from this premise.

By now, many global markets have already become crowded with local and U.S. players. The Western Europe market is now almost as competitive as the market in the U.S. In several emerging markets, especially in China and the Middle East, some local banks are looking to import U.S.-based asset management talent via subadvisory relationships. These opportunities are limited, however, as local banks in these regions tend to have fewer relationships than their U.S. counterparts.

For asset managers, the scarcity of platform openings is a double-edged sword. On one side, an increasing number of competitors are vying for a very limited universe of opportunities. On the other, barriers to entry make access to these markets all the more lucrative.

As asset management firms enter foreign markets through subadvisory relationships, they must move quickly to pounce on fleeting opportunities as they arise. For example, BlackRock, OppenheimerFunds, T. Rowe Price and Thornburg Investments are now looking to strike subadvisory deals in the Middle East/North African region.

A few openings still exist to establish local presences in certain parts of Eastern Europe, the Middle East and East Asia through joint ventures. In China, regulators have relaxed restrictions on foreign ventures, including opening up the insurance market for foreign asset managers. Last year, Franklin Templeton took advantage of this and partnered with China Life, China's biggest life insurer.

Without a commitment to global growth opportunities, it will be nearly impossible to compete with industry firms that have already gone global. Though the time to commit is now, firms must also be ready to stay overseas for the long run.

Social Networks: A Real Opportunity

by Anu

Conventional wisdom suggests that social networking through the Internet is a young person's game -- a new frontier for the millennial generation and something too complicated for Baby Boomers.

If that's true, are the Boomers using facebook, MySpace, and Twitter? Maybe. Instead, they may be accessing Web sites catering to their needs by creating topic-centric "groups" ready for the joining. Two sites come to mind -- eons.com and gather.com. Are these sites simplified renditions of the aforementioned? Not at all. Eons and Gather provide video sharing, blogging, reviews and many of the other features that typify social networking.

Asset management firms know that Boomers have complex financial pictures and a relatively large share of investable dollars, yet they have not created obvious partnerships with either site to broaden their appeal. In fact, Schwab seems to be providing the bulk of assistance through numerous articles and embedded links on Gather. As Boomers continue to use social networking, what place are asset management firms creating for an easy, intuitive liaison between social networks and their value proposition?

Debate or Participate: A Hybrid Wholesaling Update

by Steven

It is interesting that some firms are still debating whether or not they should invest in hybrid wholesaling, while others are reaping the benefits of a lower cost sales coverage model. Some firms want to see how other firms have succeeded, while other firms are already expanding their wholesaling reach. A number of firms with a hybrid model have had territories where hybrids even outsold their external counter parts.

Most firms know now what hybrids are -- a "hybrid" between an internal and an external wholesaler. Hybrids usually travel 20-30% of the time and have their own advisors. Firms have taken two primary approaches to hybrid wholesaling:

1. Geography -- Covering remote territories, such as South Dakota, where it doesn't pay to have an external due to the lack of opportunities or where it is not cost effective to periodically leave their territory, Minnesota, to cover the remote area.
2. Opportunity -- Covering additional advisors in a money center, such as Manhattan, that the external wholesaler can't cover.

The best recipe for success is to implement a territory team. Usually, the external will manage that team and will direct the hybrid and the internal. The team gets solidified by adding a substantial team based compensation component to the equation.

A few firms have been so successful with hybrids that they have started to further invest into the model. These firms are moving to a one-external-to-two-hybrids ratio within a territory structure.

The hybrids model has a proven track record. Decide now if you want to debate or if you want to participate.

Finding Candor in the Blogosphere in an Unlikely Place

by Andy

A recent New York Times article cuts straight to the chase about what makes blogs valuable and popular -- the access to frank and unvarnished insight and perspective. The article focuses on a new blog that Wal-Mart buyers are now posting to that provides unfiltered and candid assessment of the products the retail behemoth peddles.

What is of particular note is that Wal-Mart is world-famous in the retail world for a tight-lipped highly regulated corporate culture. But Wal-Mart is also known for is using technology in effective and cutting-edge ways. As such they have realized no one wants to read a blog propagated by a PR engine. It is not the ability to post information quickly that is the heart and soul of blogging technology; it is who posts the information and the nature of the content that truly adds value. Customers, whether they are in the market for the latest video game or emerging market ETF, want no-nonsense information from those closest to the products, not orchestrated PR campaigns.

The article discusses how Wal-Mart's previous endeavors into the blogosphere were quickly seen as a PR gambit. The realization and adoption of this more authentic online discourse is an illustration that this medium, while registering only about 1,000 hits a day, is one that cannot be ignored. Furthermore, if blogs are to be used successfully, by definition their content must meet these expectations.

This of course presents a challenge for the financial services industry given its highly regulated nature and commoditized product set. Yet, if the retail commodities that Wal-Mart sells in the context of a highly regimented corporate culture have not prevented them from making a legitimate contribution to the blogosphere, it is a clear sign that the financial services industry can also rise to the challenge.

Customized Search: Why Not?

by Johanna

In 2005, Google rolled out a customized search product. Basically, it's an engine that sits on top of the Google platform and allows the search provider (whoever is maintaining the Web site where the search is located) to restrict the domain. In short, the customized search engine cuts down the Web universe based on the search provider's specifications. Two examples include Green Maven's search of sustainable and environmentally friendly Web sites, and The Economic Search Engine, which searches over 10,000 economic-related sites.

Why don't asset management firms use this function? Firms could locate a customized search engine within news or commentary sections, and set that search engine to query both within the site as well as within selected financial services and news Web sites. The search could be product- or sector-specific, and labeled as the "Asset Management News" search, or the "Mutual Fund News and Research" search.

With the Google customized search tool, the search return pages would open in a separate window, but would display the firm's logo. While this option does commit the sin of sending advisors away from the firm's site, it provides a valuable service, and at least gives the firm a branding boost in the process.

If You Want to Attract Advisors to Your Web Site, Be More Experimental

by Lindsay

In a recent survey for an upcoming report, What Advisors Do Online, kasina asked over 500 advisors to name Web sites they currently use, that they weren't using a year ago. We were surprised by both the quantity and breadth of responses, both expected and unexpected, including:

• Seeking Alpha: A financial news and opinion site.
• Minyanville: A self-described "financial infotainment" site.
• YouTube: A site that allows users to post and view embedded video online.
• Zillow: A real estate market mashup.
• Facebook: An online social network.

What distinguishes the above sites, and others that advisors listed, was that they all incorporate innovative design and interactive functionality with ever-changing content. According to the same survey, advisors expect that the amount of time they spend online will either increase or remain the same both at home (96%) and at work (93%) over the next two years. Advisors clearly like to explore new sites, and in all likelihood, they are going to be spending more time doing it, rather than less.

So how can asset management Web sites, whose content is largely static, capture the attention of these advisors? The answer is simple: by being more experimental. While asset managers may never have the dynamic content that the above listed sites do, they do have the option to make content more interesting by trying out new formats and functionalities and seeing what sticks. Why not try out comment functionality, like Seeking Alpha, introduce a little humor to otherwise boring content, like Minyanville, or present data in a visually interesting format? What's the worst that could happen?

Giving Advisors What They Are Looking For

by Corianna

In a recent survey of the online habits of financial advisors, kasina asked over 500 intermediaries what they do when they can't find the content they are looking for on a Web site. According to kasina's findings, the two most widely executed actions among advisors--whether they are 25 or 85 years old--are using search functions and calling customer service. Interestingly, approximately:

• 70% of advisors use Web site search engines
• 35% call customer service
• 20% use site maps
• 20% use e-mail customer service
• 5% use chat

These findings suggest that advisors, like most human beings, are after something very simple: instant gratification. If advisors are looking for something, they want to find it right away. They are not very interested in sifting through site maps, or waiting for an e-mail reply. While calling customer service entails a time commitment--and possibly additional frustration--it promises immediate results.

Firms looking to cut back on call-center expenses should focus on making information immediately accessible via online approaches. For the moment, this means providing powerful searches on every page. I'm willing to bet that soon this will also entail providing online chat support.

Trade Publications Picking Up Asset Managers' Slack on Web 2.0

by Lindsay

kasina has been touting the opportunities presented by Web 2.0 concepts for years, most recently in our report, The Asset Manager's Guide to Web 2.0. Thus far, only a few asset management firms, T. Rowe Price and TIAA-CREF among them, have begun to venture into this space. While asset managers have been slow to embrace the ideas of interactive forums and user-generated content on their own Web sites, other players in the industry are picking up the slack.

The latest example of this trend is Ignites' MoneyVoices. The newest feature of the Ignites Web site presents an opinion piece, written by an industry expert, on a timely issue, and allows readers to post comments about the piece. The comment functionality works like a blog: comments are solicited at the end of the article and previous comments are listed below, in chronological order. Comments are reviewed before they are posted, giving Ignites a degree of control over the content and discouraging unproductive comments.

MoneyVoices was debuted last week, so it remains to be seen whether actual participation and interest will match the hype, but we see it as a step in the right direction, regardless. If industry publications and online resources continue to embrace Web 2.0, and reap the benefits of increasing user engagement and garnering publicity, maybe asset managers will finally decide to jump on the bandwagon.

The Future Role of e-Business

by Steven

I often think about what I want to be when I grow up. Although I am technically grown up, I constantly strive to evolve as a human being, so I'll always have some growing to do.

When I was in kindergarten, I wanted to drive a fire truck. But by the time I got to first grade, my dreams of being a fireman were over: I wanted to be a cowboy and ride all over the wild prairies. My career goals took a sudden shift once I hit puberty. I just knew I was going to be like James Bond and travel the word, drive fast cars, and be smooth with the ladies. In college, although the life of James Bond was definitely still appealing, I realized that business, specifically helping organizations achieve their business goals, was a more realistic life plan. But before I could start, however, I knew I had to come up with concrete objectives to project my plan to fruition. And then I made sure that my career path was guided by these objectives.

At our recent e-Business Roundtable, we had a special session for the winners of this year's Top 10 Intermediary Web Sites. In this session, I asked them what their teams' future objectives are. Most of their objectives turned out to be quite vague and didn't address the core challenges facing the asset management industry. I challenged these e-business leaders to think about how their roles should evolve. What struck me was that most of them saw that they should be an integral part of the organization, but didn't feel empowered to do so.

e-Business needs to become an increasingly more senior role within asset management organizations. We need e-business teams who can lead their organizations into this not-so-distant future. Senior e-Business heads have to think and act strategically, and work with management to make this happen. Complaining about lack of support is not going to change the perception of the e-business teams. We need e-business leaders, not followers, in these roles.

So, what do I want to be when I grow up? I want to help corporations redefine their purposes and help them have a positive effect on society and on our environment. e-Business leaders want to lead their organizations into the digital age? Well, the only way we are all going to become what we strive to be when we "grow up" is to start now.

BlackRock: Raising the Bar for Industry Web Sites

by Sean

Innovation: It happened in 1996 when Motorola released the first clamshell phone, the StarTAC. It happened again in 2001 when Apple released its first iPod. In both cases, design was the source of innovation. Motorola didn't invent a better mobile phone; it just came up with a better design. The same is true of what Apple did with its version of the mp3 player.

At the kasina e-Business Executive Roundtable last week, BlackRock unveiled a new standard for innovation among advisor Web sites. During the meeting, BlackRock presented a case study of its recently-launched advisor Web site.

• Rapid Development: From start to finish, BlackRock developed and launched the Web site in less than 12 months, a remarkable feat made possible by the collaboration of a cross-functional project team consisting of nearly 100 FTEs.
• Web 2.0-esque Content and Design: Throughout the Web site, rounded fonts, color gradients, enlarged text, and effective use of white space give the site a Web 2.0 "look and feel." Popular usage dictates the positioning of certain types of content, which contributes to the effect.
• Integration with External Data Providers: Recognizing that advisors sell more than just BlackRock, it partnered with Morningstar to offer fund comparison tools and proposal generators that account for other firms' product offerings.
• Usability Testing and Promotion: Despite the tight timeline, BlackRock spent nearly five months testing the Web site with different audiences. Pre- and post-launch, BlackRock has conducted extensive promotional campaigns, involving Sales, Marketing, and e-Business.

As a result of its efforts, BlackRock's site debuted at 8 on kasina's list of 2007 Top 10 Web Sites for Financial Intermediaries. Like Motorola and Apple before it, BlackRock didn't invent the Web site for financial advisors. Nonetheless, BlackRock has raised the bar for design excellence and innovation. It is now incumbent upon the rest of the industry to respond.

The Blame Game

by Anu

During kasina's e-Business Roundtable, e-Business executives discussed their working relationships with Compliance. For many teams, the process follows these steps:

• Marketing provides e-Business with content
• e-Business adapts content for the Web
• e-Business submits it to Compliance for review
• e-Business, working with IT, publishes content on the Web site

Many executives reported that Compliance provides inconsistent results and delivery times. This often leads to business partner perception that e-Business cannot execute quickly. Two firms are taking an innovative approach to reduce perceived frustration with e-Business.

Firm one has an SLA in place with Compliance. It mandates that Compliance must approve or reject copy within two business days. Coupled with a similar SLA for IT, e-Business is able to guarantee delivery schedules for online content.

Firm two requires that its business partners only submit content that has been pre-approved by Compliance. This approach ensures that the business will work closely with Compliance to understand legal and regulatory issues that might prohibit certain types of content from being published on the Web site.

In both cases, e-Business has found solutions to ensure that business partners do not view them as a bottleneck.

Hi, My Name is Hal. I Will Be Your Virtual Advisor.

by Mike Trapanese

Unlike the generations before it, Generation Y has grown up online. Gen Y-ers are comfortable with computers, readily mining highly-specialized information from the farthest corners of the internet. This familiarity with the electronic world has, to some extent, allowed Gen Y to replace personal interactions with digital ones. Consider sites like WebMD and eHarmony, and software like TurboTax and Quicken: users exchange information via a computer interface, which in turn renders advice and directs them toward relevant information. On the whole, Generation Y is almost as likely to turn to applications for advice as to seek professional, in-person guidance.

The implications of this shift are far-reaching for financial advisors. An advisor's primary function, as a fiduciary, is to determine a client's investment objectives and risk profile, and map them to appropriate investments. With research analysts playing an increasingly causal role in fund selection, however, the account construction process is becoming increasingly formulaic. Wirehouse advisors of the future may serve little purpose other than to interface with clients and assign their assets to discretionary platforms.

This is a service that investors of today are willing to pay for. Investment information is often cryptic and scattered across a multitude of locations, and advisors represent a liaison to this information. Furthermore, advisors know how to interpret it in the context of an individual investment strategy.

For investors of tomorrow, however, technologies like RDF promise to deliver the mutual fund lowdown with the click of a mouse. The so-called "Data Web" in the making is already painting a picture in which information scattered across the internet will be more easily accessible and cross-comparable through innovations in coding and language.

These functionalities will, over time, remove the need for a nuanced approach to gathering fund information. Especially with discretionary platform placements, it is reasonable to imagine a Web site interface replacing its advisor counterparts. The question is: How long will it be until Generation Y cuts out the middle man and replaces some portion of advisors with Virtual Advisor software?

Are You an Expert?

by Conrad

Imagine you need a new laptop. You check out a manufacturer's Web site, but see that the site is missing important technical information, such as the type of processor and amount of RAM provided. You would probably leave the site disappointedly. Later on, you find this information on a generic shopping site such as Amazon; at this point, however, you would probably think that the manufacturer is pretty incompetent, and you'd choose another one.

With this scenario in mind, we can see that it's imperative that firms be the experts of their own products. It looks bad if a third party Web site offers more product information than does the firm itself.

However, this happens quite often in the asset management industry. Morningstar offers data points such as P/E, Alpha, and Beta that are often missing on individual firm sites. Not only does this not make a firm look good, it also affects advisor site traffic in a negative way. Advisors primarily come to a firm Web site to get product information -- why should they do so at all if Morningstar offers more information?

Web 3.0: Tag, You're It!

by Mike Ma

Web 3.0. Yeah, I said it.

As the media darling, Web 2.0, starts to wear out its welcome, I'd like to direct your attention to Web 3.0 -- please try not to roll your eyes. It's probably not on your radar yet, but it should be -- because you should be doing as much clean, consistent tagging as possible today to make way for tomorrow.

Allow me to explain. Web 3.0 has been called the "Semantic Web," where basically different machines and databases will talk to each other to accomplish a task. For instance, imagine booking a vacation for your family during school vacation under different Web environments:

• Web 1.0 -- You have five (dozen) windows open to find the best price and availability. You toggle between windows.


• Web 2.0 -- You check kayak.com and see all airlines to find the best price and availability. It's easy to use due to kayak's AJAX-enabled search engine that lets you visualize and manipulate all that data in an easy format.


• Web 3.0 -- An application checks your children's school calendars, your price watch list on American Airlines, and your family budget in Quicken, and presents to you a set of vacation destination options within your budget.

Scary, right? Kind of like HAL 9000, or "Computer" in Star Trek.

Well, it's real and it's coming. IBM and Google are already making substantial investments in the arena (I hear these companies generally have a pretty good track record of execution). You can see a Google-funded project called Opine at the University of Washington. It's not good, but it's a start.

While it is unclear what applications are going to be built, -- and I don't recommend doing anything in the next 6 months -- I do know that all these things are going to run on data. Structured data makes these tasks easier.

As you look toward budgets for 2008, I can't recommend strongly enough that you should put enhanced tagging into your plan somewhere. If not this year, then please, next year.

Web 3.0 is coming. Really, it is. Stay tuned. This might be a chance to finally be ahead of the curve.

Realizing the dream of advisor-generated content

By Anu

Blogs? Wikis? Uploaded video? In a relatively short amount of time, we've seen myriad technologies that enable Web site users to syndicate opinions and information. Our clients often ask about these Web 2.0 technologies. A common question: "Is implementing these technologies worth the expense, for a potentially small user base?"

A recent McKinsey report says yes. And I agree. The author found that 75 percent of uploaded content came from 3 to 6 percent of the membership. Then, just 2 percent of the total uploaded content accounted for more than half of all pages viewed (serious long-tail).

Why is implementing these technologies worth the expense for so few people? Because this set of advisors wants to share opinions and ideas -- for free. Your customers want to talk about the business -- they are giving your firm free feedback. In most industries, market research firms offer $5, $10, or $100 to customers for standard questionnaire feedback.

The key is to do it correctly:

• Don't contact advisors based on user-generated content


• Don't take no from compliance -- partner to devise a permissible implementation (for instance, user-generated content with no interference from within the firm is not a solicitation or advertisement of any fund)


• Ensure the interface is simple


• Viral market -- wholesalers can mention the vanity URL (e.g. www.fundco.com/blog) during meetings.

The Measurable and the Important

by Mike Mc

At a training session I recently attended, the instructor was a quote machine. Among the many gems he dropped was one that he (apparently improperly) indicated originated from quality guru W. Edwards Deming:

"We measure the measurable and miss what is important."

This got me thinking about measurement in our industry, specifically when it comes to the impact of the Web in the intermediary channel. At our Roundtables, the metrics discussions consistently focus on the very basic - software packages, page hits, unique visitors - and how these change over time.

I find myself wondering if these conversations, and the efforts firms invest in measuring the Web, really contribute much value. Think about what matters to firms: assets, both new and retained, for one; relationship building, both with advisors and key distributors, for another.

Does traffic data really provide insight into the Web's impact on either of these key issues? Isn't the quality of the traffic more important? Specifically:

• Who (i.e., which individual advisors) is coming to the Web site?
• What firms are they associated with?
• How much business do they do with the firm?

To some degree, the industry is the poster child for the quote above. While a handful of firms invest significant effort in trying to connect the Web to sales results, most instead appear focused exclusively on the readily measurable.

The effort required to improve measurement is certainly not trivial. However, the industry needs to take a step back... if we're not looking at our Web sites' success in terms of our primary business objectives, then what value are existing measurement processes truly providing?.

I see this as the critical "put up or shut up" e-Business issue in the coming years. I find myself wondering... what will the metrics conversation at the 2010 e-Business Roundtable sound like? Should be interesting.

e-Mail: Is it Worth the Effort?

by Johanna

There is a wide spectrum of e-mail activity pursued by firms today, including the following two approaches:

• "Fire Hose Blast" -- Firms send e-mail with untailored content (I like to call this the "potpourri" e-mail newsletter) to a large, unsegmented group of advisors, often assuming that the benefit of targeting lists and tailoring content to specific groups is likely not worth the trouble.
• "Better Safe than Sorry" -- Firms choose to shy away from, or at least not focus on, e-mail, for fear of having advisors perceive it as spam. These firms typically have relatively few e-mail addresses in their CRM systems, and tend to send relatively few e-mails to advisors.

Both types of firms have one thing in common: they are wholly unsure of the real benefits of e-mail. Does it impact sales? Does it support other e-business initiatives like the advisor Web site?

We set out to answer a key question many firms have today: Is e-mail worth the effort? Should firms be spending any time at all thinking about e-mail?

We found evidence that firms are reaping the benefits of e-mail, including the following two data points:

• OppenheimerFunds found that, among advisors who are actively selling their funds, those receiving the "OppBrief" e-mail newsletter had 44% higher sales in the past year than those who did not.
• Web traffic to the Thornburg Investment advisor Web site jumps 80%, on average, the day after they send an e-mail to advisors.

While these figures suggest e-mail has significant value, that doesn't mean every firm should drop everything and focus on e-mail. kasina's latest report delves into the key elements that firms should have in place prior to developing an e-mail strategy. Among these key factors are: a robust Web site, the ability to target e-mail lists, and healthy home office relationships. Once these are in place, a firm can then begin to implement a strategy to truly make e-mail worth the effort.

SMS OOTB

by Johanna

I recently heard about NearbyNow and Slifter, which are new "short messaging services" (SMS) applied in "out of the box" ways. Specifically, these services help mobile phone users locate things they'd like to buy.

The concept is really quite ingenious. For example, consumers send a text message to the service with the name of a product and the zip code (e.g., Harry Potter, 10021), and the service will return a text message including the location of the nearest store in which the book can be purchased.

There is no charge to consumers because retailers are willing to pay a fee every time their name is returned in a query -- a small price to pay for a service that leads a customer directly to your door. Once they're inside, customers often purchase more than the original item they were looking for.

The concept is particularly effective because it fits seamlessly into the everyday activities of consumers. So: What technologies can asset managers use that fit into the everyday lives of financial advisors? Web sites are a start, but what additional services can firms offer to the overtaxed advisor who spends her day on the road, meeting with clients?

IMHO (In my humble opinion), the firms that first take advantage of technology that brings advisors to their products will achieve G9 (genius) status.

The other side of client computing...

By Anu

Last month, we discussed the growing opportunity to reduce energy consumption at employee desktops. In that scenario, employees would have a thin client computer on their desks that sent/received instructions from a server. To do that, firms need to run end-user applications (e.g. Word, PowerPoint, etc.) on servers.

Recently, Cisco purchased a company that enables this computing environment. In press releases, Cisco officials cited the growing demand of "greening" computing environments as a reason for the acquisition.

The growing functionality of thin client computing, coupled with significant improvements in server software, is increasingly enabling firms to reduce electricity consumption, even as their workforce grows.

In the next few years, it will be interesting to see which firms take the lead in embracing this low-consumption computing environment.

It is all about ME - Can we provide content that is relevant?

By Steven Miyao

I have been addicted to Netflix and Pandora . Why the addiction? Well, it is relevant to ME!

Recommendations engines have made significant strides. They have moved from the Amazon model, of what others bought, to more integral recommendations based on specific tagging of content attributes. Pandora for example uses hundreds of musical attributes used to categorize and match songs.

Could the Asset management industry adopt this technology for their financial advisors?

• An advisor would be able to get sales ideas based on sales ideas that worked for her in the past.


• An advisor would be able to get a value added program based on a program that has worked for him in the past.


• An advisor would be able to get a business building article based on an article that has worked for her in the past.

Companies such as Omniture, CleverSet and Choicestream have helped music and video sites become relevant to me. Maybe one day advisors will get relevant content to help them build their business.

Data Visualization: Visualize This.

By Anu

A blog recently led me to the coolest data visualization tool I've ever seen. I haven't had this much fun with data since studying data structures many years ago.

If you click on the branding area, the visualization shows relative micro-site (for different Coca-Cola Web properties) performance over time horizons specified by the user. There is no help. There are no instructions. But everyone posting on the blog mentioned how quickly they understood the process.

Imagine new ways to communicate with your user. Don't forget that advisors are people too, and, just like everyone else, they like to have fun. If you can make fund performance exciting and fun, you'll have advisors clamoring to use your firm's Web site.

The Web Site: Does Not Belong to Marketing Alone

by Conrad

Imagine that you are going on a vacation with a group of friends, and one of them picks the destination without asking the rest of you. Camping trip to Iraq, anybody? Of course, people care about their vacations way too much for this to ever happen.

To some extent, though, this is happening to firms' Web sites, with Marketing groups driving initiatives by themselves. Large chunks of the e-Business budget end up being allocated to sales ideas, value-added programs, and other intermediary-focused Marketing efforts that generate a small portion of site traffic.

The Web site, however, needs to reflect the company as a whole. While Marketing is an important aspect, the focus should be on good product information and great servicing features. Two things will help to make this happen:

• e-Business departments have to push a "back-to-the-basics" approach, driving resources toward enhancing product and servicing features before adding more "marketing" material
• Operations, Sales, and Product groups have to claim more ownership over the Web site because it is just as much their site as it is Marketing's (regardless of who technically "owns" the Web site)

The Loyalty Game: Who Really Matters

by Mike McLaughlin

It would have been interesting to see where Vegas set the over/under.

A recent study of 4,000 mutual fund investors found that more than two-thirds of asset managers have negative loyalty scores. That is, most asset managers have more detractors than supporters.

The gory details, while car-crash interesting, are not necessarily all that surprising. To illustrate: Vanguard topped the loyalty rankings; Putnam finished dead last.

Certainly this is a critical issue for the industry to address. Firms need shareholders who believe in them. More importantly, though, firms need distribution partners who believe in them.

In the discussion of the study, the article references a similar survey of 23 investment distributors in which every single one finished with a positive loyalty score. Investors may not be attached to the asset manager, but they are certainly close to the intermediary selling the manager's products. To draw an analogy, people trust their doctors, but distrust the pharmaceutical companies supplying the medicine.

With distributors continuing to have more and more influence over asset managers' success, firms have to push the envelope when it comes to both selecting and engaging them. The customer loyalty enjoyed by distributors requires greater relationship-building effort from firms. Recently we have seen:

• Increased resources pointed toward the development of value-added offerings to better service partners' advisors
• Restructured Sales and National Accounts teams geared toward meeting the needs of broker/dealer research analysts to strengthen relationships at the home office level
• Re-engineered Web sites designed to not only engage advisors but the home office as well

Activities in this vein figure to only grow. Strategies that leverage the firms own strengths must be coupled with those that utilize the cultivated loyalty and power of their distribution partners. In fact, it seems that the latter may be more important than firms have recognized.

The Need for Greater Personalization

by Lauren

In the movie, The Minority Report, when a customer walks into a Gap in 2054, they are greeted by a friendly Gap employee on a giant flat-screen monitor, who directly addresses them and references their most recent purchase: "Good afternoon, Mr. Yakamoto. How did you like that three-pack of tank tops you bought last time you were in?"

While personalization hasn't reached this level just yet in 2007, many elements of personalization are evident on the internet today, but rarely on asset management Web sites. Why is this? With almost 80% of consumers in favor of receiving personalized content online, why are asset managers so reticent to provide better customer service?

With the core building blocks in place, personalization is the key to taking advisor sites and key account relationships to the next level. When advisors can get information about products anywhere, the value-add of the Web site lies in providing personalized, tailored content they can't get anywhere else.

Certainly, implementing advanced personalization is not easy to accomplish. However, firms should think about even simple steps that they can take on their advisor Web sites, especially for independent advisors:

• Customizing featured marketing materials based on previous orders
• Integrating details about an advisors' book of business

The increasing control exerted by broker-dealers and distribution partners in general means that this type of basic personalization may become more of a necessity than a differentiator. Regardless of whether or not this type of content is provided on a microsite or the firm's general advisor Web site though, the need to tailor content to particular audiences is an increasingly important way for firms to demonstrate a commitment to their business partners both large and small.

The Big 3 Institutional e-Business Issues

By Johanna Willer

On one of the coldest days in New York City's recent history, 25 e-Business executives from top asset management firms gathered to discuss key trends and challenges within the institutional space. The 3 big issues we saw emerge include the following:


Issue 1: Striking the Right Organizational Balance

e-Business leaders take varying approaches to positioning their teams as a key player in accomplishing firms' strategic goals. For example, some firms have adopted a shared service model, which incorporates all Web-related skills for all business lines under one umbrella. In contrast, other firms have focused on being as integrated as possible with Sales and Marketing business partners.

While there are efficiency advantages to centralizing all Web-related responsibilities, integration with the institutional business is of paramount importance to ensure e-Business isn't an afterthought.


Issue 2: Increasing Adoption - Selling the Site

To parody a famous movie line:

"If you build it, they won't just come."

Even the best sites need an audience to be deemed successful. Firms are stepping up and getting creative in their efforts to engage clients online. For example, one top firm saw a great increase in the number of clients registered for the Web site after introducing a contest in which the person who registered the greatest number of clients for the site won a laptop.

Too often e-Business teams feel hamstrung when it comes to getting clients to use the site, citing the unresponsiveness of internal partners and lack of direct access to clients. However, the tactics of a few top firms illustrate that effort and a dose of creativity can engage both internal and external stakeholders online.


Issue 3: The Future is Here - Technology in the Institutional Channel

The future generation of Web savvy investors is coming. Institutional e-Business has been slow to the game thus far, lagging behind its intermediary and direct counterparts. Still, signs indicate that the tide is turning. To date, one top firm has created a streamlined version of the institutional Web site specifically for sales teams to access with mobile devices. This site focuses on product and other support information and gives road warriors easy access to the data they need.

While not all new hot technologies will make sense for institutional clients, it is more important than ever that e-Business dedicate time and energy to staying current on new Web developments with the potential to impact the business. The institutional investor of tomorrow will expect it.

These are exciting times for institutional e-Business, and we at kasina thoroughly enjoyed discussing these issues and the myriad others that will continue to challenge e-Business.

Metrics That Matter

by Mike Ma

Metrics. We usually find our clients are either jazzed by the challenge of them or look at us with a Homer Simpson-esque blank stare.

Identifying and building these metrics is a staple of our consulting methodology -- that there is no such thing as e-Business, really -- a good e-Business strategy should just look like a good business strategy. Metrics are a good way to "take out the e-."

The eyes roll and lips sigh because most people don't think anyone in the industry is doing it today ... they couldn't be more wrong. The very best are using technology-based metrics and correlating them with business value, such that it is making the company more money or saving them more money -- plain and simple.

In November of last year, I had the honor of moderating a panel with three of the very best in the business at NICSA's Technology Forum in Las Vegas.

You can see/hear them here on Ingites new "Must See" service (subscription required).
Neal Zamore from Oppenheimer talked about the evolution of Web stats to sales and tightening that correlation to be more useful.

Sean Kellenberger from The Hartford talked more about the correlation of these statistics to cost savings and retention value as he sees it from the TA side.

Vince Pellegrini from Nuveen discussed how they use metrics to drive new marketing campaigns that had eye-popping conversion rates (~25%).

All three had a very different spin on how to use metrics more effectively. It isn't just for the Amazons, Googles and eBays of the world. The very best in our business are starting to do it, and make it better. I'd like to see more of the industry do the same.

If you like you can also download the entire presentation from kasina (no subscription required).

* * * * *

A sincere PS ... In addition to great industry speakers that let you really get in the guts of their business, we had top shelf keynotes from Mark Benioff (salesforce.com's CEO), Nick Carr ("Does IT Matter?"), and Matt Glotzbach (Google Enterprise's head of product development).

I'd also strongly recommend coming to the Tech Forum this year, Oct 24-27 in Vegas. Hope to see you there.

Walk A Mile in Their Shoes

by Lee

I was reminded of an extremely simple yet valuable exercise that I often go through with clients to help provide some perspective. Let's say that I am working with a Marketing team on their support materials for the firm's value-added programs. First, I'll have the group critique a similar offering from a competitor. I will encourage them to think like an advisor, not like a Marketing executive. With limited guidance, I find that most teams will identify several flaws in the competitor's offering. Often, there will be firm-specific terminology that wouldn't be clear to an advisor. Many pieces will be lacking clear action steps.

After the team enjoys trashing their competitor's offering for a while, I will then ask the team to switch over and review their materials. Invariably, they will identify problems that they hadn't noticed before. This simple yet eye-opening exercise works well when reviewing any marketing initiative (Web sites, fact sheets, ads, etc.) as long as you keep an open mind and keep the customer's perspective in mind. I encourage you to try it with your team and to let me know what you find.

Gaining Permission

by Derek

Last quarter in our Distribution Industry Analysis, and in our recently released whitepaper called Redefining Marketing: Turning Strangers into Salespeople, kasina introduced the concept of the Advisor Continuum. The concept outlines the opportunity that asset management firms have to progress relationships along a continuum in order to have increasingly productive and beneficial contact with advisors.

Today, asset management firms are most comfortable with and do a satisfactory job of turning Friends into Customers. Firms do a poor job of turning Strangers into Friends. One critical element of turning Strangers into Friends is establishing permission to enter into a dialogue with the audience.

To gain permission, firms should devise a strategy that incorporates incentives, independent input, and the leveraging of existing customers. Examples of permission initiatives exhibited by asset management firms help provide an understanding of how firms are putting this concept into practice today.

• Fidelity's Baby Boomer campaign featuring Paul McCartney offered an exclusive message to a targeted audience and incorporated a CD give-away as an incentive to get Boomers to agree to a retirement planning consultation with a Fidelity rep.



• Nuveen Investments offers exclusive independent content to advisors through its Web site. The firm summarizes what advisors can get on a publicly available page as an incentive for advisors to register and log in.
• Morningstar ratings are commonly used in firm advertising to showcase independent value.
• Evergreen Investments and Lord Abbett offer value-added programs to a mix of Strangers and Friends/Customers/Salespeople. They not only offer the incentive of useful content, and at times independent input, but also the opportunity for the firms to leverage the interaction of existing customers.
• IXIS Asset Management offers an "e-Mail to a Friend" feature on its Web site that can facilitate the communication among Customers/Salespeople and Strangers.

Current initiatives tend to be weighted towards offering incentives in the form of free services or exclusive content. Asset management firms could do much more in the way of leveraging independent value as well as the opinions of existing customers.

In addition, in order to build permission and a dialogue, firms need to do more than just give things of value away, they must know who is consuming this information. Failing to do so may still lead to a positive advancement along the continuum, but firms will have a difficult time tracking the success of a particular marketing initiative. To be effective, permission initiatives should involve an exchange of information where the Stranger gets information from the company and the company receives information about the Stranger in order to enable the continuation of the dialogue.

Taking the Time to Prioritize

by Lee

Most companies do a poor job prioritizing - largely because they either haven't thought about how to do so effectively or haven't taken the time.

We wrote about various prioritization approaches in a recent Industry Analysis brief, and there are many that can help, but a favorite of mine is the strategy offsite. We have our semi-annual strategy offsite coming up next week at kasina, and these sessions, which we began shortly after starting the firm, provide our team with a chance to step back, review our progress, and re-evaluate our priorities as an organization. They have proven invaluable in keeping everyone on the same page.

Despite the immense value that I have seen in taking the time away from the daily grind to set strategy, I find that that most of our clients do not have mechanisms in place to do so. It is easy for priorities to get muddled when they are tackled on a one-off basis, and I encourage every firm to:

1) Schedule at least an annual, if not a more frequent, session to set the strategy
2) Do these sessions offsite somewhere (depending on the size of the team, you can even use a team member's back yard)
3) For the day (or days) that you are there, be there - no cell phones, BlackBerrys, etc...
4) Plan lots of breaks (these sessions are exhausting)
5) Have fun - it shouldn't be all about setting strategy - it is important for team building as well

The Web Does Help With Sales

by Conrad

79% of advisors say that they are more likely to do business with an asset management firm that has a strong Web presence. We got this impressive stat from a recent advisor survey that we did for our upcoming "The Secret Life of Advisors on the Web" whitepaper.

e-Business teams often have difficulty demonstrating the value of the Web and showing ROI. This statistic will help firms in these discussions because it clearly shows one thing: If all things are equal (style, performance, etc) the Web site has a strong impact on purchase decisions. An advisor will (hopefully) never just work with a firm because they have a great Web site and ignore performance, but the Web, like wholesaling, is an important factor.

How Does (Name of Competitor Here) Do It?

by Lee

Four times in the last 24 hours, a client has asked me some version of the question "How does [competitor's name here] do it? "It" has at times been related to Sales, Product, and Marketing - in each case, the client wanted to know the secret to success. The secret is that "it" is not about tactics - it is about having something unique to say. Clearly articulated differentiation helps all aspects of the business and is a necessary building block to success in all areas.

You should definitely learn from what your successful competitors do, but don't simply copy their execution - start by identifying what is unique about your organization. What makes your firm different has to be different from what makes American Funds different. We talk more about this topic in our sample Distribution Industry Analysis brief.

Integrating with Distribution Partners

by Lee

At our Spring e-Business Executive Roundtable in Las Vegas, I led a session on the importance of working closely with distribution partners (broker/dealers, banks, etc.). While the idea of "content syndication" (making information available as part of a distributor's intranet) has been around for years, we are starting to see some traction around using e-Business to support distribution partners amongst a few firms (MFS, Van Kampen, etc.) whose e-Business groups work closely with their Key Account teams. These organizations look to syndicate content for rep use and also spend time building online support for the gatekeepers and research analysts at distribution partners. These topics are covered in the brief presentation that opened the Roundtable session, and I encourage every asset manager to explore ways in which they can beef up the level of support they provide to distributors.

Advisor 2.0 Opening Presentation Spring e-biz Roundtable

By Steven Miyao

We recently held our annual spring e-Business Roundtable in Las Vegas. At this two-day gathering, 34 e-Business executives discussed with us both current and future e-business issues.

When I held my first roundtable, 9 years ago, we invited the winners of our top 20 Web site study. Attendees had just built their first-generation Web sites and were excited about the opportunities presented by the Web.

However, that enthusiasm faded over the last years, as most of the top firms developed sites that mirrored their offline content and provided most of their support. e-Business managers have had difficulty determining where to lead their Web sites.

I opened this year's roundtable by painting the imminent future: "The next generation of financial advisors."

As the Web rapidly evolves, so do the interests of the average user. For example, compared to 35 to 54 year olds, 18 to 34 year olds are (*Neilsen/NetRatings):

• 45% more likely to download free video or audio
  
• 35% more likely to watch streaming video
  
• 25% more likely to use any type of multimedia application online

Younger users are also more likely to use the Web for social reasons (Pew Internet & American Life Project. "Generations Online."), such as gaming, instant messaging, and music.

Today, the average advisor is in his or her 40s. These advisors are avid users of e-mail, news sites such as CNN, and travel sites like Travelocity. But the next generation of financial advisors is today in its mid 20s and use Web applications such as:

• Instant Messaging
  
• Flickr for photo sharing
  
• Wikipidia for references
  
• del.icio.us for search and content sharing
  
• Bloglines to share what is on their mind
  
• Myspace as a virtual home

The advisor of the future does not understand why asset mangers fail to communicate in the way they are used to communicating. Younger advisors want to:

• Instant message their Internal
  
• Read the latest blog from a PM or economist
  
• Get the lasted pricing and manager changes via RSS
  
• See what sales ideas other advisors from their firm have downloaded
  
  
  The advisor of the future is not my 3 year old son, but a 20-something who has a profile on MySpace.

  For a copy of the presentation please Download Here

  Posted by Steven Miyao at 10:55 AM Permalink Comments (0)
  May 1, 2006

  Can Institutional Web Sites Multitask?

  By Sean

  In kasina's most recently released study of institutional Web sites, "Meeting Institutional Investors' Needs Online," it became clear that firms are decidedly in one of two camps with regard to the Web's role in supporting their institutional businesses:

  - Prospecting: Supporting business development efforts by conveying information to potential investors and consultants about the firm's investment philosophy, products, and portfolio management expertise

  - Servicing: Supporting the needs of existing clients through online access to market values, updated holdings, transactional capabilities, performance reporting, and proprietary research

  Strangely, in the nearly dozen or so conversations that I have had with clients in the last few weeks about this issue, almost nobody has been so bold as to suggest that the Web could satisfy both objectives. Such limited assessments of the Web's potential in the institutional channel are rooted in investors' past behaviors.

  Yes, today, most institutional investors are probably less comfortable with the Web than the average 21-year old. Many of them probably prefer paper statements to electronic ones, phone calls to e-mails, handshakes to clicking "I Agree." The institutional business will always be high-touch, but, sooner than most firms think, phone chats will yield to browser clicks, commentary will be downloaded to iPods, and PMs will blog as I do here.

  It's been exciting to hear that a number of our institutional clients are now refocusing on the Web. As they reassess its role in supporting their businesses, I would advocate for a longer-term approach that considers both the needs of today's investors as well as those of the next generation of institutional investors, one that does not necessarily relegate the Web to playing only one of two roles.

  Posted at 9:14 PM Permalink Comments (2)
  April 9, 2006

  Why aren't there steezy mutual fund tools?

  By Mike Ma

  After 2 years of converting from skiing to snowboarding, I am in the market for a snowboard of my own. For those who fear snow, fresh air, or gravity, the benevolent brand giant is Burton. Like most newbies to riding, I just found it too confusing to find the gear I needed, so I used their product selector.
  
  It was a thorougly enjoyable experience throughout, but the kicker for me was the final question:
  

  I fancy myself someone who is relatively hip, but I admit that I didn't know what steezy meant before this, (for a fuller discussion try wikipedia). I guess this is what you get when the third question you are asked is structured with the following choices:

  

  In any case, it did a great job of e-Commerce Marketing 101 ... take the user from implicit needs to explicit products. In fact, Burton does that doesn't just filter, it actually will educate you along the process. (I think that I dabble in steez, but many may disagree)

  So I googled "Fund selector" and the top legitimate hit looks like this (no links to protect the innocent):
  

  We leave the investor to do all the work. Even if you look at one of the best sites on the market, you will find something that looks like this:

  
  

  Which still leaves a lot of knowledge and work to the investor.

  I realize that there are a number of regulatory issues in issuing advice to investors, there are simple things that can be employed on sites today.

  1. Explain if you use jargon: -- Take the first example, what do the "volatility" levels mean? Could youp place antecdotal descriptors to describe what the levels might correspond to, even if it is a septile if volatility ... at least give us something! Look at the choices in the steezy question.

  2. Dump the stock photos -- If you look in the Burton site or the graphics in the screenshots above, every graphic and photo adds meaning to the message at hand. Not a pixel is wasted. Even the driver license is a Vermont driver license, as they were founded in Burlington, VT.

  Look around at your site, how much stock photography are you using? Is it really communicating anything? We know this is a weak point at kasina and we are taking steps to fix that in our next site release.

  3. Make the process fun -- Don't roll your eyes, Mr. or Ms. Asset Management e-Biz exec (I am talking to you, Lawrence) -- it can be done. Perhaps explaining what alpha and beta, or benchmarks and why they are important. There are some examples that came to mind. For instance, Analytic Investors did a free piece on predicting alpha of NFL teams to explain their quant approach (no link anymore) which I loved. A bit nerdy for an individual investor, but it was funny and connected with the instituional audience in an authentic, brand-positive way.

  I really believe that this stuff works ... I have a new Custom board and Hail boots to prove it.

  This was originally posted on Mike's personal blog, i got so much trouble on my mind

  Posted by Mike Ma at 9:44 AM Permalink Comments (0)