Old Models Causing Firms to Lose Business

Asset managers are missing their most profitable opportunities with financial advisers, a study shows.  

Old models, imprecise targeting and ineffective communication are causing many firms to lose business, according to a report from kasina titled“The Five Advisor Segments: A New Approach to the Intermediary Market.” The report highlights these inefficiencies and provides a segmentation model based on advisers’ actual behaviors and preferences. It also includes analysis using the new model that identifies five new adviser segments: Order Takers, Technophiles, Support Hogs, Self Sufficients and Rainmakers.  

Traditional segmentation categorizes intermediaries based on channel, size, industry ranking or current value. Those models ignore adviser behaviors and preferences, which often causes sales and marketing programs to be poorly targeted and ineffective, according to the report. kasina’s new model breaks out groups of advisers based on their demographics, behaviors, communication preferences, investment decision processes and support needs.  

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

“The reality is that within each of the traditional distribution categories, there are advisers with increasingly diverse traits and preferences,” said Steven Miyao, CEO and founder of kasina. “Taking a ‘one size fits all’ approach is no longer a winning strategy. Firms need to gain a new perspective on these customer groups, and be more responsive to their specific requirements.”

The study provides an actionable framework for developing segment-specific strategies for enhancing the effectiveness of adviser sales and marketing programs. The report also contains best practices, benchmarks and recommendations on how firms can best map their distribution resources to adviser segments, communicate via the most effective mediums, and tailor service and support levels based on value potential.

The study used data on 1,533 intermediaries who completed the kasina FA Vision Benchmarking Survey in late 2011. kasina also teamed up with statisticians to perform analysis.

The report is available for purchase here.

 

DOL Urged to Allow Broader Use of Electronic Disclosures

A coalition of retirement plan trade associations is urging the U.S. Department of Labor (DOL) to permit broader use of electronic communications to deliver disclosures under the 408(b)(2) regulations. 

The coalition, which includes 15 trade associations, as well as employers and retirement services firms, submitted a letter on Tuesday to the DOL’s Employee Benefits Security Administration (EBSA), encouraging the use of modern electronic forms of communication. “Electronic communication today is no longer the exception, it is the norm,” the coalition wrote in its letter. 

The coalition is responding to the DOL’s recently released interim guidance on the use of electronic media, known as Technical Release 2011-03R (see “EBSA Revises Electronic Fee Disclosure Rules”).  A survey conducted by The SPARK Institute found that the interim guidance does not provide meaningful incentives or make it more feasible for plan sponsors and their service providers to use electronic media instead of paper for the required disclosures.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

“We are concerned that the guidance in the Technical Release provides little relief beyond that already available through EBSA’s current safe harbor, particularly as it relates to affirmative consent and dependence on paper as the default method of delivery,” said Larry H. Goldbrum, general counsel of The SPARK Institute, a coalition member.  “Based on responses to the survey and discussions with other coalition members, it is clear that a substantial majority of service providers do not intend to make use of the Technical Release policy and the required disclosures will be delivered in paper form, rather than electronically,” Goldbrum said. 

Among the concerns about the interim guidance identified in the survey are the inability of existing systems to support the DOL’s interim e-delivery approach without costly changes; the required affirmative action on a per participant basis for plans to use electronic communications; and the administrative impracticality of the required implementation and monitoring.

Coalition members continue to believe that the prior guidance developed by the DOL in December 2006, in the form of Field Assistance Bulletin 2006-03 (see "EBSA Issues Notice on Benefits Statements and Diversification Notices"), is a viable approach to encouraging and fostering electronic disclosure by employee benefit plans, while providing important safeguards for ensuring that participants who still want to receive required disclosures in paper format can do so.

“Research shows that participants of all ages and incomes increasingly prefer to access information online and we believe that doing so makes it easier for participants to act on the information,” said David Abbey, senior counsel-pension regulation, of the Investment Company Institute.

“There is broad movement toward electronic delivery of information.  For example, IRS makes tax forms available online now instead of mailing them.  The DOL should join IRS and many other federal agencies embracing e-delivery for the benefit of investors and customers,” said ASPPA Executive Director and CEO Brian H. Graff.  “Making e-delivery more available can also help to keep the costs of retirement plans down by cutting down on paper statements that have to be prepared and mailed,” he added.

Coalition members include the American Bankers Association, American Benefits Council, American Council of Life Insurers, American Society of Pension Professionals & Actuaries (ASPPA), Financial Executives International Committee on Benefits Finance, Financial Services Institute, Financial Services Roundtable, Insured Retirement Institute, Investment Company Institute, Plan Sponsor Council of America, Securities Industry and Financial Markets Association, Small Business Council of America, The ERISA Industry Committee, The SPARK Institute and the U.S. Chamber of Commerce.    

«