Is Wealth Management Missing the Message?

Rising costs to do business and contend with regulation has forced some consolidation within wealth management over the past year. After a merger, the consolidation of technology quickly follows.

The technology integration is where the fun begins.

As infrastructure projects start, the conversation quickly leads to how architecture decisions must focus on client, product data and marketing to improve advisor's messaging, communications, interaction and overall productivity.

Accelerating client loyalty and advisor engagement is often a main goal. Yet a recent study by Teradata Applications on data-driven marketing (DDM), highlights a number of the issues that are challenging marketers, which also rings true for wealth management. These challenges are causing efforts to stumble. At financial firms, one of the top priorities identified in the survey is delivering a customized/personalized experience. Other areas of focus include improving marketing efficiency, measuring marketing to business objectives and linking marketing activities to earnings.

We can point to the typical investment planning process, which involves a lengthy, large paper shuffling and data input exercise to onboard a client, followed with a review of the plan with the client.

Then, if the advisor is diligent, the client may hear back in a year to review the last plan. A lot can change during those 12 months and clients are finding the lack of interaction alarming. More important, communication is a notable influence of how clients are deciding whether to maintain their advisor relationships.

Calls reminding clients that their money market account positions are running too high or receiving a general investment newsletter is not hitting a high degree of relevancy or timeliness. Our survey highlighted that only about 50% financial services marketers are satisfied with the achievements of their companies marketing program. There are improvements, such as automated alerts, improved segmentation and targeting to improve advisor outreach.

One of the challenges with improving messaging and marketing activities that was cited in Teradata's DDM survey was the lack of integrated data. In fact, 70% of financial services marketers agreed that data is the most underutilized asset in their marketing organization. And of those, 96% said they have obstacles that prevent them from using data to make more informed decisions.

The data problem is a large one, and it just doesn't involve data from inside a wealth management firm. According to research from CEB Tower Group, 90% of advisors cannot see a consolidated view of their clients' holdings that are held away from their firm. Worse, 76% cannot see a consolidated view of their clients' holdings within their own firm.

Before improving messaging, it is critical to improve data accuracy and availability before measuring marketing and communications activity. Which drives home what Peter Drucker once said: "If you can't measure it, you can't manage it." For example, our survey found that 90% of financial marketers report challenges with calculating Return on marketing investment (ROMI) or how marketing activities impact sales revenue. With the cost of acquiring and retaining advisors being so high, it is imperative that their outreach and the firms marketing efforts are squarely aligned with not only improving productivity but also revenue outcomes.

Not surprising, the survey found that many financial firms (roughly 66%) cited IT and marketing are misaligned. The multiple disconnects between the business and IT impact how effectively the front lines engage clients. Marketing operations itself cannot seem to get out of its own way to drive towards goals of understanding which initiatives are effective to begin with.

Many wealth firms are diligently looking at these issues and starting to understand how they may be able to improve advisor marketing, as right now millions of wealth clients can attest that too often the message is wildly off target.