A Cautionary Tale

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Fifteen years ago, a good friend of mine and I found ourselves working for different, but equally prominent, investment firms. He vividly recalls his firm’s decision to pay $30,000 for a web design company to spend months creating what was essentially a classy online brochure. Numerous meetings were held as the principals of the firm tried to communicate the intricacies of the investment business to graphic artists and computer programmers who dominated the field of web development at the time. If someone joined or left the firm, if a person’s title changed, or if product offerings were added, web designers were employed at significant expense to make updates or corrections to the site. This, in addition to the thousands of dollars spent annually on web hosting and technical support.

At the same time, as VP of Marketing with my firm, my dual roles were to oversee all client communications and consolidated performance reporting. As a burgeoning technophile, I took it upon myself to build a website for our company using Microsoft FrontPage. I coded each page by hand to ensure that all elements were consistent throughout the site, and that the load times for pages didn’t overextend the 1999 standard of 28.8 kbps. Even at that early stage, I was excited about the possibilities.

Back then, few in our industry could have envisioned the exponential growth of the Internet, or the real-world implications of this new digital landscape. And while we can speak glibly of the recent past, when having a web site was considered cutting-edge, the race to ‘get online’ cost our industry millions of dollars at a time when the Internet’s reach and effectiveness were largely unknown, and the return on investment nearly impossible to calculate.

What is interesting to me is that, after the initial excitement and burst of activity, little has changed in this industry since then with regards to online technologies.

Slow Evolution

A brief Google search of small to medium size investment firms shows that – even today – many firms in the industry continue to treat their web presence as little more than an online brochure, much like an enhanced ‘Yellow Pages’ ad. The themes, imagery, and language used in many of these sites mirror those used decades ago in print material and brochures, and possess about as much functional purpose. I have seen firms that manage billions of dollars for investors with web sites that say “copyright 2006” at the bottom of the page. This doesn’t exactly inspire confidence for prospective clients.

Firms that manage billions of dollars with web sites that still say “copyright 2006” at the bottom of the page don’t exactly inspire confidence among prospective clients.

Many firms in the industry still view their web site as principally, if not solely, a brand statement. The thinking goes, we aren’t going to get clients from our web site or social media outreach. Which may or may not be true, but for the sake of argument, let’s assume it is mostly true.

So, if the primary purpose of an investment firm’s online presence is to differentiate the brand, why is it that truly unique selling propositions are almost non-existent? Why should prospective clients do business with you? What makes your offering unique, affordable, or preferable to any of the thousands of other investment firms out there? (Hint: you may want to think twice before you say it is your ‘people,’ your ‘process,’ or your ‘performance’ – more to come on this in a future post.)

Clients Are Evolving, But Advisors Are Not

While the financial services industry is not alone in its resistance to change, it is notoriously slow to adapt. It continues to do business the old way, even when there are better (and more profitable) alternatives, because of one important reason: it worked in the past. How do you tell a formerly successful CEO that prospective clients are no longer drawn to posh offices or dinners at the country club? Or that thick envelopes full of printed reports and correspondence are not efficient, cost-effective, or the way modern investors prefer to communicate?

An online presence isn’t merely about a web site, but rather an inherent way of connecting and doing business with existing and prospective clients.

One of our challenges as a digital marketing agency has been in convincing a generation of financial advisors that an online presence isn’t merely about a web site, but rather an inherent way of connecting and doing business with existing and prospective clients.

What The Best of the Best Are Doing

The days of paying tens (or even hundreds) of thousands of dollars to a web designer for an “online brochure” are (or should be) behind us. Social media facilitates real-time communication and dialogue with clients and prospects for little to no cost. Web 2.0 technologies allow smart firms to deliver the right message, to the right prospect, at the right time. The cost of developing “smart” tools to find new prospects through technology (and observe them as they move along the buying path) are infinitely less expensive than sending out a business development team with a massive travel and entertainment budget and hoping for the best.

Still, there are plenty excuses for being behind the times. Clients don’t care. It isn’t worth the investment. There are regulatory issues. I’m not going to get clients online. It’s all about personal relationships.

The real truth is probably a fear of change, which is natural. If we don’t fully understand something, we become unwilling or unable to adapt. But change is needed, and here is why: online is not going away. It is not only the future, it is the present.

Firms in the financial industry that have recognized this have begun using technology to their advantage, putting enormous downward pressure on fees (which they can do because of reduced costs), creating expectations among the investing public about how technology can help them better understand their investments, and providing real-time access to information and services. And all this with investment performance that is at least comparable to any brick-and-mortar advisory firm.

The bottom line is this: there are only two ways to grow your company and make money in the investment industry in 2014. Either bring in new clients by improving your sales and marketing efforts, or cut costs and improve margins by strategically deploying technology tools.

Today’s most visionary leaders and companies are now focusing on both. Are you?


– Joe Stallings
Founder, OrangeAxis

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