Covid is not the only catalyst for changing the marketing practices of financial advisors. The other catalyst is the impact of the Internet on financial advisor marketing.
The impact of Covid on financial advisor marketing was profound and swift. In fact, to a large extent, it was unprecedented. It has had an extraordinary impact on the business practices of financial advisors and the decision-making of individual investors.
Before Covid hit in early 2020 there were already numerous signs of change that indicated the future would not be like the past. The principal agent of change was the impact of the Internet on numerous industries that historically depended on face-to-face interactions with their clients and customers.
Bookstores are the poster child for a business model that has been largely replaced by Amazon and other virtual marketing websites. Why? Book buyers did not need to travel to stores to buy their books. Not when all of their choices could be presented to them on their phones. And, software could make their decisions easier, faster, and cheaper. In fact, Kindle has made hard-bound books relatively obsolete.
How about all of the bank branches that are closing? They are the same as bookstores. People no longer have to travel to branches to conduct their banking. Online services are faster, more convenient, and are available 24/7.
A third example is medical advice. Do people have to travel to their doctors’ offices to be told they have the flu and obtain a prescription? Or, are they better served describing their symptoms online and talking to their doctors on Zoom calls? Telehealth is here and it is likely to stay long after Covid has been eradicated or relegated to standard flu-like symptoms.
First of all, cars are tangible objects that buyers can see, touch, and drive. Financial advice is conceptual, in particular when there is no GIPS compliant track record.
Will technology ever replace car dealerships? Maybe not if buyers want to see and test drive cars. What is the alternative? Buyers rely on reviews, ratings, and testimonials to make their decisions. They forgo the test drive and rely on the experience of the others.
There are certain realities. They will test drive cars but select the one with the highest ratings. Or, they test drive cars at dealerships but buy online where there is more competition and lower prices.
Consumers also have a lot of brand identity with their cars. Repeat buyers do not have to drive BMWs. They know BMW makes great cars. The main variables are the car model and the selection of accessories that can all be accomplished online.
What happens to the marketing practices of financial advisors who have relied on face-to-face contact to maximize the impact of their sales and relationship skills?
Based on the above examples, why do investors have to travel to financial advisor offices to review their results? The obvious answers are they don’t have to and it is a personal preference. They can login to review reports online and they can meet with virtual advisors to discuss their results. As Covid has proven, financial advisor marketing and servicing should be a choice that is based on the preferences of investors and their advisors.
The financial service industry was made for digital communications. That is because it is an information-based business that can be communicated electronically. Financial advisors do not have to be present to deliver quarterly performance reports. All of the information can be delivered electronically. Alternatively, all investors have to do is login to their accounts to view their investments, transactions, and results.
There is a common perception that investors want to meet with financial advisors before they select them. A number of very successful firms have made a mockery of this perception and it is not just the Robos.
In fact, in many cases, it is just the opposite. Financial advisors want face-to-face contact to maximize the impact of their personalities, sales skills, and relationship skills. However, it is also true that some investors want to meet with financial advisors before they select them. Some investors will be comfortable with virtual interactions and the sharing of information on the Internet. Others will want to meet the old-fashioned way in the advisor’s location or their location.
Again, financial advisors will have to be prepared to interact with both to maximize their results.
There is another common perception that millennials are more tech-savvy than their parents. They grew up using technology for education and entertainment. There is no question that is true, but their parents and grandparents are no slouches either. And, they are the ones who control most of the wealth in this country.
They may not be as comfortable with more complex applications, but they are certainly comfortable with technologies that facilitate communications and interactions. Just ask the doctors, banks, and bookstores.
What this does mean is financial advisors will have to build intuitive applications that do not require an MS in Computer Science to understand and use them.
This is not a traditional versus digital marketing decision for financial advisors. Post-Covid financial advisor marketing strategies will have to offer their prospects and clients a choice. Perhaps there is only one choice that is based on the preferences of the financial advisors (traditional, virtual) or the locations of their prospects and clients (local, remote).
By definition, remote investors will be sold and serviced using virtual methods of communication. There is no traditional choice that is based on face-to-face interaction. The strategy can be different for local prospects and clients. They may have a choice that is controlled by investors or financial advisors.
It does not matter if investors are local and advisors are comfortable meeting face-to-face at their offices or at the investors’ locations. Financial advisors will have to embrace the digital age and deliver services that are based on virtual interactions. Or, they will not be able to interact with investors who prefer virtual interactions during and after the Covid years.
Covid is merely the accelerator for a powerful trend that will make virtual interactions a core strategy for marketing financial advice and services.
A few brand-name financial advisors have embraced digital marketing to build visibility for their brands and produce qualified leads for their financial advisors. However, it is also fair to say that many of their financial advisor marketing strategies are stuck in the dark ages.
The independent RIAs seem to be leading the digital marketing charge. They have the motivation and marketing budgets to make digital marketing their primary source of new clients for a reasonable expense.