While performance and quality of research remain dominant themes in advisors’ decision to recommend a product provider, their emotional response to certain firms plays a key role too, according to a new Cogent Research report.
American Funds, Prudential and iShares stand out in the qualitative space, although while Prudential has “strengthened its grip” on advisors with its variable-annuity product, American Funds and iShares have both lost a little ground to competitors since last year, the report said.
Brand loyalty is fleeting, the report points out, and Franklin Templeton is snapping at American Funds’ heels, coming in a close second in emotional brand strength, while both Vanguard and ProShares gained emotional market share from iShares. Meanwhile, while Prudential got a little stronger in its market, Jackson National in second place lost ground to Sun Life. Competition in every market is extremely tight, separated only by a few percent in most cases. “If companies don’t deliver on some deep-rooted emotional level, advisors will look elsewhere,” said Christy White, principal of Cogent in Boston.
The financial services world has learned a lot from consumer goods marketing, the sort of messaging that says “your toothpaste cleans teeth, but mine makes me look sexy,” White said.
For example, American Funds held onto its favorable position in advisors’ minds despite disappointing performance in the past year largely due to the emotional connection it have carefully built with advisors over the years.
Make no mistake: While these are emotional building blocks they play a very practical role. “American Funds has a clean, consistent story and its marketing materials make it easy for advisors to talk to their clients about having such a solid company behind them.”
That’s important because now more than ever, clients are more likely to ask pointed questions about what an advisor is recommending and why. “If an advisor can tell a clean story to tell about products and processes, that advisor is more likely to choose that brand.”
Aside from marketability, advisors also respond to brands that promise solidarity and the personal touch. One winner in this area is Sun Life, which has spent the past year hiring a large number of seasoned wholesalers who have been through tough markets before. The message? “They understand your pain,” White says. “They’re not just sympathetic, they’re empathetic, and they can provide some solid sales ideas,” in a difficult sales environment.
While these two areas are dominant, advisors’ sense of being well supported is also important, “solving problems and answering questions,” White said. “Oftentimes all these things are intertwined—the goal is to enable advisors to get back to their clients quickly and to provide superior service.”