blog

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 the