Are we getting left behind by our clients?

by Patrick Ide | Feb 15, 2021

Business to business clients, across industries, are changing the way they buy – it’s a fact. But, in the asset management industry, are we doing enough to grasp this simple reality and to take the necessary measures to adapt.

I believe that, for those that do adapt, this can be a potential source of structural competitive advantage and the good news is that only a small number of asset management firms are successfully responding so far. There’s a lot of potential upside for firms that take material measures to change how, when and where they engage with their clients.

The answer is not a simple one though; it’s about changing behaviors within the firm. It’s about how firms do things, not what they do, it’s about building real collaboration and breaking down the silos. What silos I hear you ask? The big structural ones, the ones limiting collaboration between sales, marketing, client servicing, investments and technology, I reply. Oh, we’ve already done that you say… Read on.

So, what’s happening?

Let me be clear from the start, this is all about the how, not the what. The reason I say this is that most senior sales, marketing and investment people spend a majority of their time talking about the what – and I strongly believe that because clients are changing, now is the time to look at how teams are collaborating around those changing behaviors. If you don’t, I would argue that you run a very real risk of being excluded from the digital conversation that is going on while your sales people are not in front of their clients!

The fact that B2B clients are generally changing the way they take buying decisions is of course not new. A raft of surveys by respected organizations have highlighted this fact since as early as 2012:

• The average B2B customer completes more than half of the purchase decision process before engaging a sales person – this can go up to 70% in certain cases. (note 1)
• Over 2/3 of B2B buyers want to self-educate rather than talk to sales about new products. (note 2)
• The number of decision makers involved in the typical buying decision increased to 5.8 people in 2015 vs. the 5-year average of 4.74 people. (note 3)
• In 2007 it took on average 3.7 cold call attempts to reach a prospect. By 2013 this increased to 8. (note 4)
• Lastly, for those who would say that this does not apply to asset management, a Forrester survey across industries found that financial service buyers consult between 10 and 12 sources of information during the buying process.

From personal experience, I would argue we are seeing this client withdrawal within the asset management industry too and it’s happening for a variety of reasons:

• Fund selectors imposing strict terms of engagement, materially impacting firms’ ability to connect with the RM teams of large distribution groups
• Institutional clients developing web-based sales meeting booking tools as a form of firewall to limit the burden of sales meetings
• Government institutions resorting to database driven searches in an effort to combat corruption
• Weakening event attendance, the rise of popularity of the multi-manager event platform
• Etc.

All are symptoms of clients insisting on imposing (and being technologically enabled to do so) their preferred engagement approach on the armies of sales people that besiege them daily. Clients can inform and educate themselves, track market trends, assess product options, short-list strategies and suppliers and all this, before sitting down with a single sales person.

Clearly, the increased availability of data and information sources as well as the pressures for unbiased, fact-based decision taking is driving a change in the balance of power between the buyer and the seller. Equally clearly, distribution functions need to change how they engage with their clients.
The funny thing is this: you would think that with these trends readily apparent, distribution teams across the industry would be rushing to adjust. The question is: are they?

Sales has changed

10 years ago, the best sales people were those who were able to influence client buying criteria to such an extent that the criteria simply reflected their own firm’s product strengths. Today, the rise of the fund selector, the establishment of strict procedures and governance bodies, the aversion to scandals such as Madoff, have all but driven such practices from the industry.

If more than 50% of the buying decision is completed before the sales person is contacted by the client, how do you influence the client in the early stages of their buying process? How do you make sure that your product is on their long list? How do you explain that the peer group for your product should not be the one indicated by Morningstar because the benchmark is different? How do you ensure that your newly launched product is considered despite its short track record? How do you speak to investment committee members not willing to meet with you? How do you engage with influencers within the client firm who would like to see your competitor strategy selected even if you don’t know who they are!?
Digital is dramatically changing the role of sales. The thing I find fascinating is this: a bit like a frog in slowly boiling water – is sales aware that the client has turned up the heat, and that their job has forever changed? Because, it has.

If you’re not there, you’re not in the conversation!

And the simple truth is this: if you, as a sales or marketing leader, are not collaborating intensively with your opposite numbers in sales or marketing to develop new and relevant ways to be present and engage interested buyers across the digital communications platforms they are visiting, your firm is effectively no longer part of the conversation.

Breaking down the silos

The answer sounds easy but challenges the status quo that I have observed in many, many financial services firms over the last 20 years: deconstructing the silos between sales, marketing, investments and technology. For the purpose of this article, I’m going to focus on the areas that typically form the distribution function.

I agree, it doesn’t sound impressive and that’s just the problem. But, if it is so easy, ask yourself this: why are so many sales, marketing and client servicing teams still not able to collaborate effectively? Why are so many sales people critical of their marketing team’s campaigns (“no use to me”, “not relevant to my clients”… I could go on all day)? Why are so many marketing people fearful of collaborating with their sales colleagues (“they just say ‘we know the client, so this is how it needs to be”)? And why, when I attended a sales strategy program at Kellogg Graduate School of Management recently, was I the only pure-play marketing person present?

Given how are clients are changing, I would argue that this simply can’t continue.

Focus on the how not the what!

I would argue that in the new paradigm, every sales person should be working hard to make marketing their best friend, to access their skills in dialogue marketing to make sure that the firm is part of the conversation even if they aren’t sitting in front of their client.

Marketing should be working just as hard to collaborate with, and understand the issues their sales colleagues are facing, and to engage clients and prospects in ways which will contribute positively to progress along the sales funnel: demand generation, leads nurturing and qualification, account-based approaches, the list goes on.

Client servicing should be working hard with technology as well as marketing to explore and co-create solutions that will enrich the experience of the client while enabling the capture of data that will further the development of the client relationship to the benefit of sales.

Collaboration is a win-win

The key here is the enormous upside potential for successful collaboration between sales, marketing, client servicing and technology – all can succeed individually, but the upside potential for seamless collaboration outstrips what they can achieve alone. The opportunity is simply lying on the table.

I guess the real issue in the end is leadership. As I’ve already said, it’s about the how not the what. Distribution is composed of multiple functions each with their own focus, jargon and career paths. The onus is on leadership to create a meaningful and ambitious vision and roadmap for future success. This should include the vision for what the firm should represent to the clients, the positioning, the relevance of the firm’s DNA. It should also include a call to arms for collaboration (including with the investment side of the business) and the need to change how distribution teams function to engage clients for success. Even better if it is hard coded into performance objectives and all sides!

The best is still to come

I know many will respond that this is already happening. My answer is that I’m really not seeing it. At best, most visions are a half-baked re-work of the same old language that you see in the ‘About Us’ section of fund managers web-sites across the industry. At worst it’s a set of sales targets with no mention of clients, focus, positioning or value creation. The real work is still to be done.
And the race is on…

Notes:

1. CEB survey 2012: Digital Evolution in B2B
2. Forrester
3. MHI Sales Best Practices Study 2015

How well is Europe represented on your European Board?

by Patrick Ide | Feb 14, 2021

Over recent months I have had the opportunity to speak with many senior leaders from the European headquarters of some of the largest asset managers globally, most of them based out of the UK. This fact, the strength of the UK within the European and even global asset management industry, has been especially remarkable, undeniable. As a serial expatriate, I have come away with a reinforced sense of respect for my home country. Yet these discussions have also left me with a question about diversity. Not about gender diversity, but about cultural diversity.

Is the gravitational pull of London creating a cultural myopia within asset management firms?

There can be no doubt that London remains the firm favorite for many US-based firms for their expansion plans into ‘Europe’ and thereafter their launchpad towards the continent. Ease of access, language and the extensive talent pool in London are all strong and rational arguments for this. However, with the UK acting as a bridgehead for so many international firms into Europe, I cannot help but be surprised by how the clear majority of board members and senior managers appear to be of Anglo-Saxon origin and how few of those people seem to have spent time living and working in the markets that they are responsible for building their businesses into. My question: with such reliance on the talent pool of one country and the resulting lack of diversity of thought, experience and cultural sensitivity, how can you successfully be sure to bring the voice of the European client base into the board room?

Years ago, I worked for a Unilever firm in Paris called Lever Industrial. Our team was made up of people from France, England, Germany, Italy, Switzerland, Austria and the Netherlands. Clients from across Europe had a voice at the table, represented by people with deep experience of their needs and the specificities of their markets. This experience was ensured by establishing a base of strong local talent and enhancing it with frequent expatriation meaning that ‘international’ was at the heart of all senior leader’s careers. Moving into the world of asset management was to be a rude awakening; the simplistic and Anglo-Saxon-led view of Europe (‘just translate the English headline, after all, we know how to do it here…’) struck me as myopic in the extreme. Since then, some progress has been made. After all, we are talking about nearly 20 years ago, so one would hope so.

Recognizing the complexity of Europe

The simple fact is that Europe is diverse. Geographically speaking it reaches from the polar cap to north Africa and the Atlantic coast to the plains of Hungary. Religiously, Europe is composed of followers of Islam, Catholicism, Protestantism and more. Temperatures range from the freezing winters of Sweden, to the raging summer furnace of Spain and Greece. To simply call it Europe, or ‘The Continent’ is a gross oversimplification that does not do justice to what it takes to be successful across the region. And here’s the rub, how can you successfully service clients from such a diverse geography? How do you make sure that you are able to hear, listen to and digest the diversity of customer need? What is the right degree of complexity to embrace when the focus today, is on strict cost management? How should you balance local responsiveness and central synergies?

For me, it all starts and ends with people. In a recent conversation, a colleague of mine of central European nationality, working for a very large US asset manager, was commenting on what a big and positive step it was for his firm to employ someone from Continental Europe to the EMEA management board. That’s one person on a board of eight to ten people within a division that is looking for significant expansion and development into non-UK Europe. How can the voice and diversity of continental European clients ever be heard in such a configuration? The cultural biases will be all but deafening.
With consolidation in both UK institutional and retail distribution, shelf space declining as more firms bring in guided architecture and concentrate their supplier partnerships, competition from passive further shrinking the addressable market, growth and expansion on the ‘Continent’ is once again high on the agenda of many UK-based asset managers. Indeed, I would argue that ability to address and manage the complexity of Europe will become a key factor for the success, if not survival of many firms over the next business cycle.

Working harder to internationalize the talent pool

There is no doubt that London is the European powerhouse for asset management. However, as it looks to navigate Brexit and prosper further, I would argue that firms based in London need to work harder to find ways to bring diverse cultural experience into their organizations to enable the voice of customers from across the full spectrum of their clients to be heard. Such diversity of experience takes time to build, from expatriation ensuring mixed experience across markets in both local office and headquarter environments, to foreign-local hires, to structurally building multi-national teams responsible for driving decision taking. However, over time, such approaches will help to deconstruct cultural biases and bring diversity of thought and experience through-out the organization.

In conclusion, I strongly believe that having strong multi-cultural leaders with mixed in-country experience of managing both local and central functions across a variety of markets and ensuring that leadership teams and working groups include a broad spectrum of people who have lived, worked and breathed the same air as the customers they serve can only benefit the competitivity of firms and London as a whole. It’s taken 20 years to get where we are today, lets see if we can accelerate the next step!

The advantages of near-sourcing: freeing up your people to focus on the things that matter

by Patrick Ide | Feb 12, 2021

One of the key preoccupations of any CMO or Head of Marketing is ‘have I got the right people focused on the right things, am I really using my people to best effect?’. Marketing near-sourcing can help to answer this question by providing a means to tap into a talent pool that, until now, has been difficult for marketing leaders to access.

The workload imposed on marketing teams across the asset management industry has never been higher and this, at a time when resource levels are stagnating or declining. In all but the best resourced teams, we see employees stretched thinly, trying to fulfil both the execution and maintenance of existing marketing collaterals and the development of strategic initiatives that will help ensure the profitable growth of the business. Now more than ever, it is critical to be sure that your resources are focused on the right work and are doing it the right way.

From personal experience, we know that it is quite easy to skim over this simple question, as a negative response is often to open a can of worms. However,we would argue that it is likely to be critical to the future success of your team, and to really come to a balanced point of view, you need to reflect objectively on the following 5 questions:

1. What are the right skills and experience needed to undertake a specific task?
2. Do I have enough of that skill and experience to meet the demands of the business?
3. If not, am I allocating over- or under-skilled team members to cover the need?
4. If they didn’t have to do that work, would I prefer them to work on other tasks?
5. If they did, would this add greater value to the firm?

Marketing near-sourcing is a viable solution for many marketing teams facing these issues and provides a means to tap into a talent pool that, until now, has been difficult for marketing leaders to access. The comparatively low cost of these services opens the opportunity to exploit near-sourcing as a strategic option allowing managers to consider outsourcing often-repetitive, executional work that until now, has been executed inhouse or with relatively high-cost outsource partners in the home-market. Tasks such as desk-top publishing, layouting, design, presentation beautification, updating web pages, social media execution and monitoring and so on, can be deployed to a near-source partner in a low-cost location that offers the skills, professionalism and quality equal to those available on the ‘home’ market and at a highly economic cost.

In here’s the crux: deploying executional tasks to be managed by right-skilled team members in a low-cost location allows you to free up the time of home based, highly skilled and experienced resources, to focus more time and effort on strategic initiatives and activities that will help drive the growth and prosperity of your firm.

Put simply, it’s about allocating the right work to the right skills-set in the right location at the right price, while increasing the motivation of your team by focusing them on work that really has a high value impact on the business.

The advantages of near-sourcing: Effective international marketing operations

by Patrick Ide | Feb 11, 2021

The workload of asset management marketing teams has never been higher and yet resources and budgets are at best stagnating as cost-income ratios tighten: Increased regulatory requirements, demands from sales teams across multiple locations in different languages, maintenance of sales materials and presentations, publishing newsletters, maintaining web pages… Use near-sourcing to help manage the execution of ‘business as usual’ activities and balance the workload of your teams.

Marketing teams across asset management, including the big ones, are caught in a double trap between resource tightening and the rapid expansion of digital tools. On top of that, marketing assets are requiring higher levels of aftercare and constant renewal to remain relevant.

Catering to international demands with less resources

Add to this the daily business of newsletter production, updating your shelf of standardised sales presentations, beautifying presentations, laying out invitations and emails, strategy updates, producing infographics, updating web pages… the list of work never gets shorter while team resources are often struggling to expand at the same pace or may even be reduced. Combine that with the extra dimension of catering to the fragmented demands of international sales teams in a variety of locations and the pressures become all but manageable.

In simple terms, the right solution is to establish a service centre in a low-cost location. Having built such a centre of excellence in Poland, I can vouch for the benefits and efficiencies that this can bring. In real terms however, except for large organizations that already have an offshoring strategy, such projects are time draining, complex and lack critical mass in order to be a realistic solution for most marketing teams.

Tap into a near-sourcing talent pool!

Marketing near-sourcing, however, is a more viable option for many marketing teams and provides a means to tap into a talent pool that, until now, has been difficult for marketing leaders to access. Near-sourcing is a new form of marketing services that combines traditional services such as desk-top publishing, layouting, design, presentation services, web publishing and design, social media management and so on, all provided from a low-cost location that offer the skills, professionalism and quality equal to those available on the ‘home’ market at considerable cost savings. After-all, why pay €65-85 an hour or more for a freelancer or internal staff member to do desk top publishing when you can get the same service for €45?

Balancing act: skills versus task complexity

Near-shoring helps to balance the equation between skills and complexity of task and the cost of labour: focus high cost and high skilled team members on high value-added tasks, while lower skilled tasks can be managed by adequately skilled team members in a low-cost location. Or, transfer work from external service providers based in high-cost locations to a near-shore provider with the same skills but significantly lower costs.

Put simply, it’s all about allocating the right work to the right skills-set in the right location at the right price, all while increasing the motivation of your team by focusing them on work that really has a high value impact on the business.