Digital Engagement Drives Asset Manager Firm Selection by Advisors, J.D. Power Finds
Against a backdrop of shrinking fees, rising costs and thinning ranks of wholesalers, digital communication has become the most effective way for asset managers to connect with and influence the investment decisions of financial advisors. According to the J.D. Power 2019 Advisor Digital Engagement Study, released , financial advisors who report high levels of digital engagement with a specific asset management firm are significantly more likely to increase their investment with that firm.
The Advisor Digital Engagement Study is a new syndicated benchmarking study that evaluates how financial advisors digitally interact with asset management firms and how that digital experience affects their brand impressions and future intentions to invest client assets with those firms. Digital engagement is evaluated across multiple channels including email, mobile apps, podcasts, social media, webinars and websites.
“For asset management firms to be successful — or in some cases even survive — they’re going to need to deliver engaging, differentiated digital content through the right channels that helps advisors do their job better and grow their practice,” said Mike Foy, Director of Wealth and Lending Intelligence at J.D. Power. “As firms continue to shift more resources to digital, they need to be very strategic about how to deploy those resources to drive ROI. It’s not necessarily about replacing wholesalers with technology, but rather how to blend the two in a way that leverages the strengths of each.”
Following are some key findings of the inaugural study:
- Digital engagement drives investment: Advisors who have consistent digital interactions with asset management firms are more likely to invest client assets with those firms. Specifically, 66% of advisors who indicate high levels of digital engagement with an asset manager — meaning they have used two or more digital channels within the past two weeks — say they are very likely to increase their investment with that asset manager. By contrast, only 37% of advisors citing low levels of digital engagement with asset managers say they are very likely to increase investment with those firms.
- Excepting email, advisor digital engagement is low across channels: More than half (56%) of advisors are engaged via email with brands they use, but utilization of all other digital channels trails significantly, with an average of just 42% of advisors accessing the website; 25% viewing a webinar; 8% listening to a brand’s podcast; 6% following the brand on social media; and 4% having downloaded an app. Advisors who use these digital channels are looking for more than just access to product and market information; they’re also seeking practice management and business building ideas and content they can share with clients. Firms need to provide multiple reasons for advisors to further engage with them digitally and become a preferred resource.
- Digital leaders jump ahead of the pack: Digital leaders, many of which are among the industry’s largest players, are far outpacing most firms in the industry in engaging advisors through digital channels — and they threaten to take even more market share away from smaller rivals. American Funds leads the industry in digital engagement, with 51% of financial advisors indicating they have high levels of digital engagement with the brand. JP Morgan follows with 31% of advisors citing high levels of digital engagement. BlackRock and Franklin Templeton each achieve high digital engagement among 25% of advisors.