Practical analysis for investment professionals
28 June 2018

Zeitgeist: Why It Matters to Advisers and Investors

The word “zeitgeist” means “the defining spirit or mood of a particular period of history as shown by the ideas and beliefs of the time.”

What is the defining spirit for advisers and investors today? It’s all about client experience, communication, and social media.

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Client Experience

The client experience is central. The CFA Institute research report “The Value of Premium Wealth Management for Advisers” stated that “Advisers must start to think in terms of client experience, not just performance.”

What does this mean for today’s adviser? From that report:

“[T]he next phase of the profession’s development is going to require advisers to step well outside their comfort zone. Clients are now more willing than ever to challenge their advisers. Their needs are changing and their expectations are rising. . . . The future hallmarks of value in the relationship are not just going to be exemplified by an adviser’s ability to generate returns, but rather, their aptitude to deliver an experience that simultaneously gives control and delight to clients.”

When I ask women about investing and what is important to them, I don’t often hear “rate of return” or “performance.” These days a strong track record is just the starting point. Instead, most women say they want a great client experience. That means one that includes their whole family. As a 50-something venture capitalist explained to me:

“Investment firms should be a trusted partner, a comfortable place to get help, build confidence and competence and help build networks. Make it easier for women to learn about investing, microfinance, technology, and philanthropy so they have the same advantages as men. Involve women early, educate them and they won’t perceive investing as a difficult thing.”

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Clients want and expect clear and rapid communication. But on their terms.

Would any investment firm hire an adviser today who said they don’t use social media? My guess is no. Imagine an adviser in 1963 saying they refused to use a telephone, or in 2003 saying they wouldn’t use email: Being a technological dinosaur simply isn’t part of the investment industry’s DNA.

As advisers, we need to talk in the language and use the tools of the people who we are talking to. Communication today consists of analogies, metaphors, videos, emojis, smileys, JPEG images.

To be unaware of popular culture is to be unable to communicate, whether we are listening or speaking. We can all improve in the area of communication. An entrepreneur I interviewed told me:

“Investment firms should train all of their employees on how to treat customers. Often women are made to feel inferior even if the men serving them are 10 or 20 years younger than they are and with significantly less experience. Make employees aware of this and teach them how to professionally communicate. You can show them videos using social media, and then you can discuss case studies of real-life customers telling stories about how they were happy or unhappy in specific situations. This would be massively effective.”

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The investment industry needs to build trust and confidence. Where better to start than a full-on willingness to share and be shared? Offer client service that is social. The vast majority of today’s investors use social media, most often Facebook. To quote the Pew Research Center’s “Social Media Use in 2018” report:

“Roughly two-thirds of U.S. adults (68%) now report that they are Facebook users, and roughly three-quarters of those users access Facebook on a daily basis.”

For high-net-worth advisers, the report continues:

“LinkedIn remains especially popular among college graduates and those in high-income households. Some 50% of Americans with a college degree use LinkedIn, compared with just 9% of those with a high school diploma or less.”

Is it even possible today to be an investment adviser without using social media as part of our day-to-day activities? Perhaps, if we are well-established or about to retire. But if we are neither, our clients will want to message us on Facebook, our prospects will want to find us on LinkedIn, and we need to be reading what they are reading in their social media feeds.

“Getting social right” will be a critical factor to success.

Investment Professional of the Future report graphic

Social media marketing is a grand opportunity . . .

For Investment Firms:

PwC’s 2016 report “Asset Management in the Social Era” highlights how social media is becoming a vital marketing component and offers significant opportunities:

“It is essential for asset managers to embed social media in their strategies in order to better address communication with audiences and, most importantly, to carefully listen to and be part of the shifting investor sentiment in almost real-time.”

Access to data has enhanced the playing field for social media marketing, but many firms are still lagging in the effective use of data. I interviewed an executive last year who summed up the feelings of many:

“I find that investment firms are too reactive and with all of the data available today they should be able to personalize the customer experience. Find out what I do online . . . what do I search for? Send me bright ideas as to what I could do with my money. I never read the boring investment newsletters and would much prefer to receive live feed that they think would be of interest to me based on my activity patterns.”

Progressive investment firms apply data well and prioritize social media marketing.

Clara Shih is the founder and CEO of the San Francisco-based firm Hearsay. Hearsay helps financial advisers engage with clients through social media, adviser websites, email, and text messaging. Her recent post is worth a read: “How AI and Digitization Align Sales, Marketing and Data at Today’s Most Transformational Financial Firms.”

For Investment Advisers:

When I first started working in the industry, new brokers would prospect for clients by using the phone book. Today Google is our phone book.

And today, when it comes to using social media to build their business, investment advisers can learn from leaders across every other industry. My suggestion is to look for best practices and advice from outside your usual suspects. Why not take a word from the wildly successful?

Gary Vaynerchuk, CEO of VaynerMedia, is a renowned New York-based marketing guru who regularly rants about marketing opportunities on social media. One of his recent posts described the situation quite well:

“The current state of the internet and social media is by far the biggest marketing opportunity of this era. Social media marketing is the epitome of underpriced attention, especially when it comes to Facebook and Instagram ads. Please, please execute on this amazing opportunity that is in front of you. So many of you spend far too much time thinking, strategizing, etc. instead of just executing.”

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Why does the zeitgeist matter to every adviser and investor?

No woman or man is an island. We all exist in the context of a time. To attempt to live or work apart from the times we live in is like swimming against the tide.

For investment advisers and for investors, popular culture and the zeitgeist matter.

Client experience, communication, and social are as important for us as tickers were to the ticker tape.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images/ Christoph Hetzmannseder

About the Author(s)
Barbara Stewart, CFA

Barbara Stewart is a chartered financial analyst (CFA) with 30 years of investment industry experience; five years as a foreign currency trader, more than two decades as a portfolio manager for high net worth entrepreneurs, and during the past six years, as an interview-driven researcher for multiple global financial institutions. She is a keynote speaker for CFA societies, banks, stock exchanges, and industry conferences globally, and she is a columnist for CFA Institute, Canadian Family Offices, and Canadian Money Saver. She is on the Advisory Board for Kensington Capital Partners and also is the Ambassador for the Kensington Women’s Forum. Fourteen years ago, Stewart saw a need to challenge outdated financial industry stereotypes and share positive messages about women and money. Today, she is recognized worldwide as one of the leading researchers in women and finance. Rich Thinking® global research papers quote smart women and men of all ages, professions, and countries, and are released annually on International Women’s Day, 8 March. To find out more about her research, visit Barbara Stewart.

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