Written By: Alex Cowan
Earlier this month we attended the FSC's "Is the future of funds management direct to consumer" briefing. Given the room was full, it's easy to argue that a lot of fund managers are thinking maybe it is.From within the industry fund managers face difficult market environments, distorted monetary stimulus and the increasingly fee-sensitive mindset from investors, regulators and governments. On the product side, active managers are witnessing ETFs and other low-cost passive index funds flooding the market and capturing investor interest and inflows
.Increased competition is resulting in the compression of margins and this is coinciding with the decision of some superannuation funds to take their funds management functions in-house. This poses a challenge to the funds management industry which has grown alongside the expansion of Australia’s superannuation pool.It is therefore unsurprising to see some fund managers starting to shift their focus towards the retail audience. So what are some of the trends we are seeing as the funds management industry adapts to this seismic shift and how can fund managers better strategise marketing efforts to communicate directly to the end-investor?
TREND 1: Streamlining marketing efforts through digital channels and data collection
To target the retail market, fund managers need to recalibrate their lead generation strategy and think more like a B2C financial services organisation.Equally important is the need for customer data collection and modeling. A recent PWC research
report on the 10 competitive technological drivers in 2020 states that customer intelligence will be the most important predictor of revenue growth and profitability.Understanding your customers' needs, desires and behaviours can be the difference between profit and loss. Data collection is no longer restricted to relatively simple heuristics built from focus groups, surveys and interviews. With access to big data, AI and advanced technology, fund managers and other financial services companies have the opportunity to unlock new consumer insights and streamline their customer marketing. Channels like Facebook, Instagram, LinkedIn and others are playing an increasingly important role to this end and when it comes to lead generation, all offer tools to effectively track the sales pipeline and attribute leads back to specific campaign.
Google Analytics attribution, Google Ads conversion tracking and social media channels' tracking pixels also offer the ability to gather insights from clear and measurable metrics so funds management firms can understand and determine the exact ROI on marketing and advertising spend. Furthermore, with the growth of mobile device usage, having an intuitive user interface which is mobile-optimised for all portable devices is crucial if you desire successful conversions and happy customers.
TREND 2: Non-financial distribution channels
Another growing trend is a greater alignment and partnership between financial product providers and non-financial distribution channels similar to how Coles
sell insurance via their consumer facing channels or you roll up your banking into the Qantas Money app. Naturally regulation is a significant consideration but it's interesting to play with the idea of fund managers looking to increase their exposure to retail investors using the audience reach of others.
Are there regulatory challenges to be aware of?
As always, there are regulatory limitations to consider, quite aside from ASIC's financial licenses regulations.Earlier this year, the Australian Competition and Consumer Commission’s (ACCC) released their 623-page Digital Platforms Inquiry
, reporting on the results of its inquiry into digital platforms and ad-tech giants. Assessing the likes of Google and Facebook's market power, competitive harm and privacy to consumers, this reports delves further into how businesses and digital platforms are collecting data and using it to compete unfairly in the industry. The report has implications for CMOs and marketing practices so to read more on this, follow this link
to our recent blog.Finally, with more data comes more responsibility. Financial institutions have been addressing information security and technology risks for decades, but a growing number of cybersecurity ‘events’ in recent years has shown that the traditional approach may no longer be good enough. As fund managers begin to collect more customer data, they will need to ensure that this information is protected and used appropriately.
As technological developments combined with structural shifts within the superannuation and financial services landscape continue to excerpt pressure on financial institutions, there is a growing need for firms to adjust and adapt accordingly.In this ultra-competitive market, fund managers are assessing their unique value proposition (UVP) and communicating their point of differentiation - there is no upside in being a well-kept secret.The best fund managers will seize upon new and innovative ways to deliver their UVP in a compelling narrative to their audiences through technology, integrated marketing and lead generation strategies, underpinned with right-time-right-channel content. Related: How to Develop an Integrated Communication Plan for Your Next In-Person Event