Financial Firms Ramp up Web Message to Advisers

Asset managers are using more creative methods such as social networking to reach financial advisers, according to Cerulli Associates.

A Cerulli report suggests that social networking sites such as Twitter can serve as a cheap place for financial firms to “advertise.” Nearly 60% of asset managers have plans to increase Internet advertising spending while reducing spending for consumer print, according to Cerulli data. Furthermore, Cerulli notes that the financial services firms increased their ad spending on social networking sites by 98% in August, even though they decreased spending on other sites by 10%, according to Watershed Publishing and AC Nielsen.

Many financial firms are hopping on the social networking bandwagon (see “From Wall Street to Tweet Street”). Firms that are using social networking include: Vanguard, American Century, and Putnam. At Putnam, CEO Robert L. Reynolds tweets about various topics, some of which resonate with mainstream media outlets. “This helps build Putnam’s brand and, in some cases, helps profile specific products while providing a major opportunity for Putnam by keeping their name in the press,” according to Cerulli.

Advisers and investors are increasingly amenable to new methods of receiving information, Cerulli asserts. The Federal Reserve found that 60% of households are using the Internet to conduct business with a financial institution, according to the report.

Brand Importance

Amid times of poor market performance, advisers look beyond just the numbers when evaluating asset managers, thereby making the brand more important, Cerulli says. Asset managers recognize the increased emphasis on their brand: 80% said their brand is more important in the retail intermediary marketplace (compared to 60% in 2008 and 36% in 2007), according to Cerulli data.

Education is one big way asset managers are enhancing their brands with advisers. When sales managers were asked which marketing methods are most effective with advisers, topping the list were practice management (50%), sales ideas (50%), and investment education (44%).

Cerulli notes that asset managers are beefing up their investment education on the Web, using creative methods such as blogs and wikis. While blogs have great potential to reach out to advisers, Cerulli cautions that firms might first need to file content with the Financial Industry Regulatory Authority (FINRA). “This may be an obstacle, but shouldn’t be a permanent deterrent,” the report says (see “FINRA, SEC Rules for Social Networking”). To put it in perspective: TIAA-CREF’s site and its Facebook account are checked four times per day, 365 days a year, to ensure validity and compliant content.

When Cerulli asked advisers why they choose an asset manager, the top two responses were: a consistent style of investing (68%) and an unblemished ethical reputation (58%). Cerulli says asset managers are smart to focus their message on those two areas.