RETHINKING DISTRIBUTION

Where dowe stand?

What will be the key implications?

Fund promoterswill need to strengthen their presencewithin social media Although social media is not expected to be a‘game changer’it can still be expected to form a major component of marketing and information gathering for the investment industry, particularly in terms of brand awareness and new business prospects, but also for complementing existing communication channels. Distributors will have to become increasingly tech savvy because this is what future clients will expect and demand. Also, communication with Generation Y clients is likely to be more nuanced and involved, as it will not be enough for firms to disseminate product information. They will have to enter into a continuous and live feedback with investors, gathering information on product preferences and countering or neutralising negative feedback. Social media may also assist prospects and clients to get close to their Portfolio Managers in order to better understand the investment philosophy and monitor portfolio characteristics, potentially creating a cult of ‘Star Asset Managers’. The ultimate goal for fund promoters is to have their reputation strengthen directly by their investors. “Social media is a good fit for us because it’s about relationship- building. It’s one of our cornerstones. Everything we do is for the client. If clients or prospects are having conversations about topics, we want to be a part of that and offer our expertise or understand the pain points.” Sheryl Larson [17] , Vice President and Online Marketing Manager at Northern Trust.

Most of GenerationY who typify the growth of social and new media have only just begun to reach the required affluence to embark on their own investments. Also, the use of social media and mobile applications in relation to investment decision- making is still relatively low. While a mass of financial information is currently available on the internet, online brokers, bank websites and many other sources, investors to date still remain sticky to their financial adviser and the established relationship between the client and the professional adviser continues. As GenerationY - particularly those born in the late Eighties and onwards for whomglobal connectivity and information access is taken for granted - begin topush through into a serious investment demographic, we can expect a more informed investor. These will be investors who will have used the web to advise themselves of the basics of investing, including the differences between products, financial instruments and risk/return relationships. These investors will collect information through social media and will leverage on it to have more informed discussion with their financial adviser. However, we do not expect amajor shift in distributionmodels as there will continue to be a cleavage between sophisticated investors and those who rely on free advice via online sources and social media. What dowe expect in the long term?

[17] RockThe Boat Marketing, Asset Managers And Social Media, Circa May 2010

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