Are Today’s Mutual Fund, ETF Communications Enough To Engage And Re-Engage Investors?

Today’s post draws its inspiration (if you will) from three influences:

  • A Prudential study I saw yesterday reporting that 44% of investors are reluctant to ever put more of their money back into the stock market (download The Next Chapter: Meeting Investment and Retirement Challenges report).
  • The 289-point market (Dow) drop yesterday. This morning I heard on Twitter that yesterday was the third time this year that the Dow has moved 200-plus points compared to nine times in 2010. There’s nothing like market volatility to shake the confidence of someone whose commitment is tenuous.
  • My touch-up painting yesterday afternoon of some trim at a Wisconsin lake house (the spiritual center of Rock The Boat Marketing).

As I painted, I was reflecting on the daunting job of the investment communicator today. How do you “win back” the investors who say they’re not likely to return to equity investing? When they became equity investors, probably, they believed in your marketing communications about the “eroding effect of inflation” on a cash or bond portfolio. They continuously invested, thanks in part to your steady drumbeat to “pay yourself first” and benefit from the value of “time in the market.” Any number of other marketing messages may have made an impression on them at one point.

Your shareholders, your advisors’ clients believed and then they experienced…and now more than four out of 10 investors are thinking that they’ve had enough. Hmm, what can you possibly do about that, I was thinking to myself?

Help In Making An Informed Selection

Then I reached down to dip my paintbrush back into the Benjamin Moore paint can and it was at that point when I remembered an article I’d read about a Benjamin Moore app. What the app does for paint-buying is where I think mutual fund and exchange-traded fund (ETF) communications may need to head. Communications you produce may need to move away from the abstract (and definitely away from a product emphasis) to context.

Let me explain. The Benjamin Moore iPhone app can be used to upload photos of a living space.


This screenshot shows a photograph that's been uploaded to the app. If a paint-buyer wanted to repaint the wall to match the color of the fireplace, for example, he or she could use the app to select colors from a strip representing a color spectrum (which is shown) or harmony, which are complementary colors.

In other words, the user uploads his needs and interacts with the app to see his options. The paint supplier reaches into his inventory and displays the colors that might work for those needs.

Apps Support Relevance

Do you see the difference between this approach and how investment companies communicate today? Just as there are countless colors of paint all of which could work in some setting, there are innumerable investment options. But the communications you provide go only as far as to describe each option.

What if we stopped expecting investors and advisors to 1)come to the paint store and 2)walk down the aisles, looking at swatches and trying to guess the fit between what’s being sold and what they need? What if digital technology could be employed to truly “know your customer” and help elevate the art involved in helping advisors and investors find investments appropriate to the investors' lives and temperaments?

Portfolio analysis and portfolio-building tools abound online, of course. And some in the broad investment space are experimenting. For example, see this March Wall Street Journal article about how virtual reality can help investors visualize themselves in retirement.

But I think that money manager communications about the "suitability" of their investment products for use by individual advisors and their investors can go much further.

Leading with the user’s context may be an effective way of re-engaging investors and reaching new ones. As suggested by the Benjamin Moore app, mobile especially lends itself to more relevant (e.g., local, personal, even social) communicating and understanding. In fact, personal relevance is becoming an expectation of mobile apps.

We need to think about how much longer we can expect to rely on the same limited stable of communications (the abstract investment messages and product descriptions). We've seen them originally offline and they've been ported in large part to mutual fund and even ETF Websites. But I encourage you to think different as you approach mobile app development. This is the time and mobile is the opportunity to better communicate with advisors and investors.

What do you think? Have I inhaled the paint fumes or is this something you’re also thinking about?