Asset Management Audience Behavior
In the APAC, investors behavior surrounding asset management is often linked with emotions. Clients are also heavily influenced by a firm's track record and media image. In the Middle East social media is an important tool in how firms connect with clients, as is how they build their reputation. In Europe, social media is instrumental in determining how investors view asset management firms. In addition, digitization is an important factor for investors. Asset management firms in the US are generally behind in their use of social media, and in this region clients are mostly influenced to work with a firm based on how much information the firm can provide them with. Finally, in the UK social media is essential, and clients are also swayed by reputation.
For each of the five global regions selected (APAC, the Middle East, Europe, North America and the UK) I have researched the following questions relating to asset management audience behavior: How do they find out about asset management firms? How do they decide to work with them? How do they use social and mobile? How do they interact with their web sites?
For each area I have searched for specific information relating to clients of top firms such as Nuveen, Pimco, Blackrock, Calvert Investments, however, I found that firm specific data was generally not available, and I believe that this is because the topic is fairly specific and the data has not been collected, or it has not been released online. Where this data was not available for a specific region, I have provided details as to why and have explained where I searched for data or how I attempted calculations.
Emotion is known to influence behaviors when it comes to asset management. Out of all global regions, Asia has the most varied emotional response in this area. It is "home to those both the most and least influenced by emotions when it comes to money". For example, in Indonesia consumers average at 8.1 out of 10 in terms of the influence of emotion on financial decisions (with 10 being only influenced by emotion). Whereas Japan averages at 5 out of 10.
In addition to this, we know that HNWIs (high net worth individuals) in the APAC are receptive to the use of technology by asset management firms. HNWIs in this region claim that it is very important for their wealth managers to have a strong digital offering.
Research by CNC Communications has highlighted numerous other factors that impact on APAC investors' behaviors. They found that 77% of investors in this area are influenced by a company’s track record on earnings, 86% are influenced by the company's media image, and 66% are influenced by a clearly articulated equity story. In addition to this, we know that investors in this region are motivated to improve their understanding of investments, they seek knowledge about potential impact, asset classes and their place within an investment portfolio, costs and fees, ways of investing and tax efficient investments.
After a thorough search, I have found that there is no data relating to how clients in this area are using asset management websites because the area is fairly niche and the data has probably not yet been collected.
Research tells us that social media is a main factor influencing investors decisions on asset management companies in the Middle East. Around 80% of investors in this region use social media, with a third reporting that they use information gained here to make decisions. In addition, around half of this group use social media as a source of market updates, and a third use it to research about investment services or asset management firms.
Data collected in Qatar tells us that in this specific region of the Middle East around two-thirds of investors claim that company's annual report was a significant factor in their investment decision. In addition to this, a Credit-Suisse study found that investors in the Middle East generally have expectations to receive a return on their investment in shorter turn around times, with a lower aversion risk. This means that they are likely to select asset management firms based on their ability to deliver this. However, these expectations differ depending on age group. Research has found that these expectations are mostly held by younger investors.
Religion is also a factor that impacts on asset management audience/investor behavior in the Middle East region. A study has found that "religious tenets influence investors’ behavior toward their selecting investment portfolio." This may indicate that religion and its relationship with investments may influence how investors decide to work with asset management companies.
After a thorough search, I have found that there is limited information regarding how investors use social and mobile when it comes to asset management, and how do they interact with asset management web sites. After searching through industry reports, online articles, academic papers and news stories on the topic I have found that there is no data specific to this topic. I also looked for data relating to interaction with major firms in the area, however, this data was also unavailable. This is because it is quite specific and the data has yet to be collected. So, I have looked for additional information on how social media and the internet is used amongst people in this region.
First, I found that, in general, people in this region are avid users of social media. Around 67% of people currently use WhatsApp, 63% use Facebook and 50% use YouTube. In addition to this, use of the internet has rapidly overtaken use of traditional media outlets, such as television, magazines and radio. This suggests that investors in this region may be more inclined to research investment opportunities and asset management firms online and through social media.
In Europe, investors' trust in financial markets has been regained since confidence was lost in 2008. This means that in general, people are happier to put their asset management firms again.
89% of asset managers have a social media account dedicated to asset management. In addition to this, in 2016, 10 of the top 25 users of social media in Europe were European asset management firms. This was up from 7 in 2013.
Moreover, social media is becoming an important source of information for institutional investors. They are "increasingly augmenting traditional financial news media with social media in order to make investment decisions". 44% of them in this region are using social media to seek educational content surrounding their investment decisions. Asset managers are responding to this need by focusing their efforts and educational content for investors. In addition, research tells us that 33% of investors are using social media to research asset managers as well as recommendations for investment products. Finally, I also found that 90% of hedge funds in Europe are active on social media.
All this data informs us that investors in Europe are using social media to research asset management firms as well as to educate themselves about their investment opportunities. Use of social media in this way is increasing, and asset managers and management firms are responding to this.
In particular, millennial investors are impacting the space in Europe. This demographic is focused on digitization as well as concerns beyond those purely investment related. They are also more inclined to carefully select their asset managers.
According to Rob Hudson, Head of Digital Distribution at Aberdeen Asset Management, "the use of digital distribution channels is
improving the way customers perceive your industry and a traditional asset management company."
Overall, in this region, we can see that social media is instrumental in determining how investors view asset management firms. In addition, millennial investors in Europe are most likely to select an asset management firm focused on digitization.
The largest asset management companies in the US (as of 2017) are the following: Bank of America Global Wealth & Investment Management, Morgan Stanley Wealth Management, J.P. Morgan Private Bank, UBS Wealth Management and Wells Fargo.
US investors are seeking specific aspects from asset management companies. Firstly, investors are actively seek detailed insights about their investments, due to this demographic becoming increasingly averse to risk. Especially for ultra-high net worth (UHNW) clients, access to high quality information is more important than ever. Asset management companies who offer clients high quality relevant data are more likely to secure these investments from these clients. In fact, 38% of investors see access to investment information as the most reassuring signal of credibility. And 72% want investment reports that are easy to understand.
In addition to this, it is also important to US investors to view an asset managers company as safe, trustworthy and reliable. 45% of investors claim that the safety of the principal is their most dominant concern, so asset managers who are trusted in maintaining safety are likely to do better with clients in this region.
Another key aspect is that asset managers have the correct technology at their disposal. 84% of US investors claim this to be essential. Finally, 63% expect their risk profile to be evaluated on a monthly basis by asset managers.
US investors have very specific expectations and emotions that drive their decisions when it comes to asset management. To begin with, clients in this area have expectations that are 44% higher than what advisors tell them are realistic. 77% of investors see themselves as behaving cautiously rather than aggressively with their investment decisions. Most US investors also believe that they would be better off if they could keep their emotions out of the way when making financial decisions, they also say that they struggle to keep emotions out of the way when the markets are volatile.
In terms of what clients think about asset management websites, it is generally negative. They are mostly seen to be overly complex and confusing. Mostly, it is believed that asset managers have largely ignored good practice in terms of websites. Research of 80 websites showed that only 1.1% of sites achieved a target readability score of 60. The biggest problems were the length of the sentences, which were too long and complex.
Finally, I have found that US asset management firms are generally behind on their use of social media. Only one third of asset management firms have a social media strategy. They are failing to utilize social media to leverage brand awareness and recognition. Experts believe that US investors will soon be looking to social media to influence their asset management decisions, and given that over 62% of US adults are using social media, asset management firms in this region quickly need to address this need.
In the UK, investors find out about asset management firms mainly through digital avenues. 64% of asset management companies in the UK believe that content marketing will be their most successful channel in attracting new clients over the next 6 months, and 42% believe it will be social media and email marketing. 71% of firms are focusing on creating websites that have simple navigation, and a good design factor. This data tells us that in the UK firms are incredibly focused on connecting with clients via digital channels.
While there isn't specific information available on how investors seek to connect with asset management companies, or how they utilize certain channels, such as social media, I have been able to find that UK asset management firms in particular are focusing on social media. Many large firms in this region have not spent a penny on traditional marketing in years. They see the future as connecting with clients digitally, specifically through social media.
In terms of how investors/audience decide to work with asset management firms, I found a 2016 UK asset management study, which found several key findings relating to this. To begin, 29% of investors will decide to work with a firm due to the fact that they already have a relationship with them. For 38% of clients, it is the reputation of the firm that persuades them. Around 26% of investors claim that convenience is also a key factor (such as branch or website access). 25% are swayed by the products and services that are offered, and 33% claim that the charges firms apply are key. Website ease of use was important to 23%, and 17% claimed that recommendations from friends or family were important to them. Aspects that were important but less essential were factors such as that the firm is a provider of a fund range (14%) or specific fund (10%) that they were interested in.
To sum up, I have found that audience/investors from different global regions have different behaviors when it comes to asset management. While social media and access to information plays a significant role for most regions, there are still some differences. In the APAC, investors are driven by emotions, and are also heavily influenced by a firm's track record and media image. In the Middle East, social media is an important tool in how firms connect with clients, as is how they build their reputation. In Europe, social media is instrumental in determining how investors view asset management firms. In addition, digitization is an important factor for investors. Asset management firms in the US are generally behind in their use of social media, and in this region clients are mostly influenced to work with a firm based on how much information the firm can provide them with. Finally, in the UK social media is essential, and clients are also swayed by reputation.