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Tuesday, July 09, 2002

What do Advisors Want?

by: Tony Pennino

What is the most effective way of reaching advisors? What are they looking for? What do they respond to? As always, the answer is simple: marketing.

But, the marketing has to be very specific, at least according to a new report from Rothstein-Tauber, Inc. (RTi) entitled "Effectiveness Of Mutual Fund Marketing And Sales Strategies". Financial advisors noted that marketing does influence their recommendations, but two marketing strategies were most effective when trying to reach them. Advisors were most responsive to tools that were designed to build business and information that helped save an advisor's time.

The practices advisors singled out for praise are as follows:
  • the sharing of customer database information for purposes of prospecting;
  • using the advisor's name in lieu of their own on a newsletter therefore branding the advisor directly;
  • the provision of pre-qualified leads;
  • providing software to assist the advisor in their own prospecting;
  • the provision of educational materials such as audio tapes or cd-roms of talks given by respected professionals or material that allows knowledge expansion particularly in the transition to a fee-based business (American Funds) or option strategies (Evergreen);
  • bulletin boards or chat rooms where advisors can exchange ideas or information;
  • and helping the advisor to arrange seminars to lend credibility.
"These types of offerings rise above being thought of as 'marketing strategies' and achieve the status of becoming 'business tools'," Nancy Salk, vice president of financial/investment services at RTi, told the MutualFundWire.com.

Salk continues that good customer service is key to success in winning over advisors. "As funds become less differentiated on a product basis, they must rely on other elements of a value proposition," said Salk. "The effective wholesaler helps the advisor to build business. Good service is a precondition for a relationship with a fund provider, bad service is an immediate disqualification. It is the price of admission into the ballpark."

Further, advisors do not worry about -- in fact, they applaud -- fund companies that utilize direct-to-consumer advertising and other forms of public relations. They do not believe that that leads to cannibalization, nor do they believe that the fund firms are trying to take their business. "RIAs and financial advisors see themselves in alliance with mutual fund companies. It is not like it was ten years ago, when they saw themselves in competition with the fund firms. When a mutual fund advertises, the RIAs see it as helping their efforts."

Firms that respondents cited as strong marketers are as follows:
  • Putnam Investments,
  • Oppenheimer,
  • American Funds,
  • AIM,
  • Fidelity,
  • Franklin Templeton,
  • and MFS.
"The more fund companies do for advisors, the more the advisors will do for those companies' funds," the executive explained.

"Basically, the advisor sees no difference in the different products being offered. So, all things being equal, the advisor will recommend the fund from the firm with a strong marketing machine over the fund from the boutique shop," she contended.

Salk's advice to fund firms: "Mutual fund companies willing to invest in marketing efforts geared toward financial advisors and RIAs will reap greater profits. It's that simple."

RTi's report is available only to the financial community at $5,000 a copy. 

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