Bill Hortz's picture

"Rather than engaging in a push and pull on the merits of digital marketing, we wanted to be able to demonstrate that there are firms having success in this way." Graig Norden, FreeWheel Marketing 

[The Institute for Innovation Development recently talked to Graig Norden, Founder & President of Freewheel Marketing - a financial services marketing technology consultant and research firm - about their major new study entitled "Marketing Technology's Role in Growing Assets Under Management." The study led to the firm being selected as a finalist for’s thought leadership award among tech providers. We discuss how the research findings demonstrate the dearth of marketing tech in financial services, its proven efficacy in growing assets, and recommended tactics for advisory firms to flourish in today's higher tech landscape.]


Hortz: What was the impetus for this study? Tell us about your methodology, proprietary algorithm, and what exactly your Freewheel Score represents?

Norden: Our expertise is marketing technology and the study itself sought to demonstrate that the firms leveraging client-facing marketing tech tools will grow AUM faster than their contemporaries, all else equal. An important consideration here is that the study itself was not a survey, because surveys invariably have all sorts of biases. Instead we made the top independent advisors and asset managers unknowing participants by scraping data off of their websites. This is possible because any type of marketing technology requires that you put a snippet of code on your website. That’s how it measures whatever it’s seeking to measure – clicks, opens, submissions, etc. So we found ourselves sitting on a wealth of data and then created an algorithm to rank the universe top to bottom by their use of such tools. The resulting Freewheel Score assigned to each firm is a holistic view of each manager’s use of digital marketing tools.

Hortz: A very interesting and heartening discovery from your study is that the fastest-growing RIA firms have a Freewheel Score that is 28% higher than that of larger RIA groups, yet their median AUM is 78% lower. So there is not just hope, but great success already for smaller firms to be able to compete in this new marketing landscape. Can you tell us more about this?

Norden: Most people would reasonably assume that digital tools are a luxury for the big shops. However, in applying our scoring model to FA Magazine’s list of fastest-growing RIAs, we found a number of tiny shops that are opening the doors with the idea that technology will be a more integral part of their success. And, as you you’ve pointed out, there’s much evidence to suggest that it’s been accretive towards asset growth.

This is fascinating because we think that it’s going to create an enormous amount of pressure on mid-sized firms. Whereas large RIAs will likely find it easier to buy their way out of trouble or reallocate resources, mid-sized firms have a comparatively more difficult time doing so. Since many of these firms have scaled their businesses by throwing bodies at the problem, there’s an overstaffing issue that makes it difficult to pivot even if there is recognition of the need to do so.

For small firms, this presents a competitive advantage in some respects. For one thing, it’s cheaper to throw technology at the problem than it is to throw bodies. And for another, if you lay this sort of foundation, you’re acting in line with all of the demographic trends that suggest that investors – institutional investors and high net worth included – are expecting their financial relationships to grow increasingly digitized.

Hortz: What recommendations for advisors embarking on their digital journey have you derived from your research?

Norden: As with anything, you have to start with a strategy before you start fiddling around with tactics. I talk to a lot of advisors or asset managers who have a convoluted assortment of internal and external professionals that are working independently on various tactics – SEO, social media, video, etc. Those tactics are all worthy of consideration, but individually their success in helping to raise assets is dubious. However, as part of a deliberate strategy that integrates the various tactics, a firm can make the data actionable across operations, marketing, and sales. I’ve seen Morgan Stanley and McKinsey refer to this as a “data lake.” We think that as the use of technology grows more ubiquitous, this will be the gold standard.

Hortz: What are the major reasons that firms are struggling to adopt and implement their digital strategies?

Norden: This is an interesting question. The average Freewheel Score, which is the underpinning of the study and is a holistic measure of digital adoption, was 25 for the largest advisors and 36 for the largest asset managers (out of 100). That’s anemic from an overall industry perspective. Still, there are firms we can point to that are prolific users of technology and it’s evident that they have created a competitive advantage for themselves.

There are two major factors holding investment managers back from modernizing their business models. The first is that financial services has historically been very insular, and I continue to hear objections about how the rules don’t apply. For example, “we only work with institutional investors” or “we only work with high net worth individuals.” I guess the implication is that these types of people don’t know how to use an iPad? But as Don Draper said, “if you don’t like what they’re saying, change the conversation.” So in many respects, our study sought to change the conversation. Rather than engaging in a push and pull on the merits of digital marketing, we wanted to be able to demonstrate that there are firms having success in this way. Then the conversation changes from an abstract dialogue to “do you want to keep pace with your competitors?”

I wish I had something more profound to say, but the second factor holding most firms back is, unremarkably, their leadership. For boutique investment advisors, it is often the successful advisors or portfolio managers that graduate to the C-Suite. However, just as Michael Jordan was not able to parlay his success on the court into success as an executive, a former portfolio manager may not necessarily be the best CEO. The problem is compounded if you consider that marketers have historically not had a seat at the big kids’ table in our industry. But their roles have grown far more sophisticated, so this must change. The new CMO must be part engineer, part data scientist, and part content marketer. Incorporating these disciplines will be paramount in a firm’s ability to demonstrate relative superiority.

Hortz: In your interviews with financial services leaders on digital marketing, what have been some of the most interesting perspectives you have uncovered?

Norden: As it relates to marketing technology, the objective should be to scale your audience, automate routine tasks, and use data so that any subsequent communication is personalized and within the appropriate context. This approach should increase sales velocity and otherwise strengthen client relationships. After all, financial services will always be about relationships.

The Managing Director of Digital Marketing of a major bank, whose wealth management arm had the highest Freewheel Score, reminded me of this recently. Her firm’s philosophy is not to use technology to enable its advisors to handle more relationships, but rather to automate certain tasks so advisors can spend more time deepening their relationships with clients. Similarly, the CEO of Alexandria Capital, Augustine “Gus” Hong, told me that he wants his website to do the selling, so his advisors can spend every moment acting as a fiduciary for their clients, and nothing else.

Hortz: Any final advice or words of wisdom you can impart to advisors on pivoting from traditional business development efforts to a technology-based approach?

Norden: The mergers of Standard Life and Aberdeen or Janus and Henderson are likely to foreshadow a broader trend as margins continue to erode and competition intensifies. On the advisor side, it’s a fantasy to think that Betterment and Personal Capital haven’t changed investors’ expectations. So the best advice that I can give to an advisor is to prioritize user experience because, whether you know it or not, you’re in the middle of a two-front war. With giants like Goldman Sachs and BlackRock on one end of the spectrum and nimble Silicon Valley upstarts on the other, the status quo is not an option if you are a going concern.

If you look at asset flows, demographic trends, and fintech itself having gone from a cute concept to a wrecking ball, how can you possibly expect to compete if your marketing strategy is predicated upon factsheets, a booth at a conference, and a PowerPoint deck? It’s the equivalent of bringing a knife to a gunfight. There are over 35,000 independent advisors and asset managers, some of whom are actively trying to entice your clients with websites that are rich in content and will nurture their engagement. Our study demonstrated that these managers are being rewarded for this approach. We believe the opposite is true too, as antiquated managers will increasingly find themselves swimming against the tide. But, it’s not too late to pivot!

This article was previously posted on Financial Advisor Magazine Online

The Institute for Innovation Development is an educational and business development catalyst for growth-oriented financial advisors and financial services firms determined to lead their businesses in an operating environment of accelerating business and cultural change. We position our members with the necessary ongoing innovation resources and best practices to drive and facilitate their next-generation growth, differentiation and unique community engagement strategies. The institute was launched with the support and foresight of our founding sponsors - Pershing, Voya Financial, Ultimus Fund Solutions, Fidelity, and Charter Financial Publishing (publisher of Financial Advisor and Private Wealth magazines). For more information click here.


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