Connecting to Clients

Amid the market turmoil, advisers might be better off sending their own message to clients, rather than relying on financial firms. Some firms sent a more effective message than others amid September market conditions, according to a report by research and consulting firm Corporate Insight. Some of the most impressive messages came from two advisers at Merrill Lynch and Wachovia, says Michael Ellison, Executive Vice President at Corporate Insight. Advisers have a unique opportunity to reach out with a message amid the current market, he adds.

The most effective way to send a message to investors is e-mail combined with something else, such as a posting on a homepage, Ellison says. “Financial marketers have a very important task on their shoulders right now to help calm investors…and they’ve got to do it proactively.”

Corporate Insight has accounts at many financial firms and, therefore, was positioned to analyze messages sent by firms. The consultant reviewed e-mails and scoured 100 homepages of 78 companies, discovering some common themes in how firms responded to the financial crisis for the week ending September 26.

Using New Media

Financial firms used tactics such as messages from CEOs and expert commentaries, utilizing various communication media. iShares, New York Life, and Vanguard all used video messaging. Some firms, including Merrill Lynch, used snail mail to send reassurance to clients. Forty firms addressed the financial crisis on their homepage and/or via e-mail, but only 11 of the firms sent clients e-mails. Ellison says it was surprising that so many firms said nothing at all.

According to Corporate Insight, many firms made it a point to distance themselves from toxic investments, highlighting their good financial standing (interestingly, AIG was on the list of firms utilizing that method). Other firms used the crisis as a platform to gain new clients, including Fidelity and TIAA-CREF.

Four firms posted prominent homepage images or messages, as well as sent e-mails to clients (Charles Schwab, Fidelity, iShares, and Merrill Lynch), according to Corporate Insight. Ellison says those four firms stood out the most. Fidelity featured a link on its homepage to a page titled “In markets like these, Fidelity can help,” and sent an e-mail offering a complimentary portfolio consultation. Charles Schwab reached out to investors both online and via e-mail with extensive information, including a link to a “letter from Chuck,” or Chairman Charles Schwab.

The report notes the different approach of iShares, which took the opportunity to focus on its transparency with an e-mail and a slogan emphasizing transparency at the top of its homepage for advisers. “If you look at the underlying cause of this whole crisis, it’s lack of transparency; nobody knows where the bad eggs are held…so transparency is a key thing that firms should home in on,” Ellison said.

Merrill Lynch Deal

According to the report, after Bank of America’s decision to purchase Merrill Lynch, both institutions posted announcements on their homepages. On the Merrill Lynch private site, an image linked to an open letter from Robert McCann, Vice Chairman and President of Global Wealth Management. The letter addressed the wealth management group, noting that it will continue to operate under the Merrill Lynch Wealth Management brand. The letter read that, currently, there would be “no change in the terms of the way you and your Financial Advisor conduct business together.”

Corporate Insight received an e-mail from its Merrill Lynch adviser on September 24, assuring investors of the financial safety of the institution and attaching a brochure titled “Why Your Accounts Are Safe at Merrill”—but the report notes that the brochure was dated, as it did not mention the recent acquisition.

Ellison’s advice to advisers is: “Don’t necessarily rely on the firm documentation…because the Merrill stuff we received from Merrill Lynch the company was very generic; it looked like it could’ve been written five years ago….It gave no wording to what’s currently going on, but the broker himself did a really good job.”

Illustration by Shout