Published by Advisor Perspectives
By Nina Eisenman and Jeff Briskin
April 2, 2013
Faced with products that are constantly falling in and out of favor, fund companies find it increasingly challenging to gain advisors’ loyalty. New research from Advisor Perspectives shows that offering outstanding online research and due-diligence capabilities is key for fund companies that wish to win the competitive battle for the time and attention of financial advisors.
Fund company websites are the third most common source of fund-related information used by advisors, the research shows, and the quality of a fund company’s online capabilities plays an important role in advisors’ decisions to use a company’s products. And while tablets and smartphones haven’t yet replaced PCs as the computing platform of choice, more than half of advisors use these devices at least once a month to access fund-site data.
These findings are based on the results of an online survey conducted by Advisor Perspectives in January 2013. A total of 282 investment advisers, registered representatives, financial planners and insurance agents responded.
’Online’ is as important as ’in-person’
Only about a decade ago, advisors relied primarily on fund wholesalers to provide in-depth information on funds, and most of this information was only available in printed form. This is no longer the case.
Survey respondents reported that independent research sites like Morningstar and interactions with fund wholesalers are their most common source of fund-related information, but fund websites are a close third. Advisors are far more likely to use these sites than respond to emails from fund companies or solicit opinions from other advisors.
There is a correlation between the resources advisors use and the level of assets they manage.
Advisors who manage larger pools of assets tend to rely more on wholesalers than fund sites, while the reverse is true for advisors with fewer assets under management. This is understandable, because wholesalers tend to focus their efforts on cultivating and serving the top advisors at larger firms. Those who aren’t considered ‘top-tier advisors generally don’t have the same level of access to wholesalers and rely more on their own efforts to find fund-related information.
Fund sites are critical research tools
Nearly all advisors rely on fund company sites to aid in their research and evaluation efforts.
On the whole, more than half get at least 25% of their due-diligence information from fund sites. Nearly one in four rely on these sites for more than 50% of this data.
The more money an advisor manages, the more he or she uses fund sites for research purposes.
Those who manage $100 million or more in assets utilize these sites for a greater percentage of their due-diligence information than those with smaller pools of assets. This may be because top-tier advisors use a broader range of funds and fund families and are expected to deliver a higher level of performance analytics to their clients.
Focused on fund facts
Advisors tend to use mutual fund websites primarily to access core-level data on performance, holdings and risk metrics on funds they are using or considering recommending for their clients. Most also use these sites to download prospectuses, fact sheets and fund manager commentaries.
The advisor-only areas of many fund sites offer content, interactive presentations and videos related to practice management and client acquisition. However, relatively few advisors avail themselves of these resources.
Fund company sites lag in mobile usage
Many industry prognosticators predict that mobile devices will soon surpass PCs as the primary means for accessing the web. While advisors are a ways behind this curve, more than half use these devices to get information from fund companies.
Although 45% of survey respondents said they never use mobile devices for this purpose, 36% of respondents access fund information from these devices at least once a week.
Advisors use mobile devices for the same kinds of research-driven tasks as PCs.
These devices are used most often for getting updated prices and conducting research on funds. For everything except quick-hit tasks like getting price quotes, mobile users prefer tablets over smartphones. Advisors with tablets are also more likely to use tablets to view multimedia content, use investment tools and conduct client presentations. Given their advantages of larger screens and easier navigation. iPads and their brethren are likely to become the predominant mobile platform for advisors who wish to conduct business outside the office.
Are fund sites meeting advisors’ expectations?
Fund companies have spent billions to improve the breadth, accessibility and timeliness of their online information. Indeed, accessing fund companies’ websites is so integral to advisors’ routines that advisors evaluate website quality when deciding whether to add a fund family’s products to their investment lineups.
Well over half of respondents stated that a fund company’s online capabilities contribute to their overall impression of the company. Nearly 10% won’t deal with any company that doesn’t offer a superior online experience.
Yet, in spite of the vast improvements fund companies have made, very few companies stand out as being the best. Of the top 20 largest mutual fund companies*, only nine were singled out by more than 10% of advisors as offering superior website capabilities. Mobile users were even less impressed: Just six companies received more than 10% of advisors’ votes.
This is an important wake-up call for fund companies. In an era where it’s increasingly difficult for funds to outperform the market consistently, advisors are relying on a broader set of criteria to determine which funds and fund families earn spots on their recommendation lists. For many advisors, online capabilities are an important benchmark.
Fund companies can’t control how advisors think about their products, but they can influence advisors’ perceptions of their online presence. Improving these capabilities is an investment that fund companies can’t afford to miss.
*Source: InvestmentNews, The 100 Largest Mutual Fund Families.
Nina Eisenman is president of Eisenman Associates, a graphic and website design firm specializing in branding and marketing communications for investment companies. Jeff Briskin is director of marketing for Advisor Perspectives and president of Briskin Consulting, a strategic marketing and creative services firm catering to investment companies and financial advisors.