Our New Virtual Reality

It took a disaster for investment managers to make overdue changes in the way we interact with clients. For leaders who accept there is no going back, the crisis is an opportunity.

Across the investment management business, the discussion is shifting from how to cope with the crisis to how quickly the industry will get back to normal. But what is instead becoming clear is that many of the changes forced on the industry by the Covid crisis are here to stay.

It is uncomfortable to admit, but it took a pandemic for our industry to finally make long overdue changes in the way we interact with our customers. Digital–first client engagement strategies championed for years by Marketing leaders, usually with limited success, are proving perfectly suited to the crisis.

Not only are they “saving the day” at a time when the traditional in-person Sales-led approach has all but collapsed, they are providing clients better experiences and turning out to be cheaper than what firms were doing only two month ago.

The changes forced on the industry by the Covid crisis are here to stay.

Here are some of the basic ways the crisis is changing client engagement, and the significant benefits these are driving, both for managers and clients. Each is helping to define our new normal:

• Clients are in no hurry to attend in-person events & conferences.

  They’ve quickly adapted to virtual ones—and appreciate not having to travel. Given lingering concerns about contact risk, it is actually going to require pretty special programming to lure them back to crowded hotel conference rooms in the future.
  Impact: Significant savings on event logistics, sponsorships and staff T&E
  

• They’re more than comfortable with meeting virtually with advisors.



  Many retail and institutional customers seem to prefer well-scripted and efficient Zoom calls to in-person visits and lunches. The crisis messaging that has been developed centrally is usually more useful to them, while for firms, these interaction are more easily measured
  Impact: Significant savings in Sales T&E. Better aligned client messaging.


  

• Just-in-time client messaging is more effective and efficient than BAU communication.

  Every day, cross-functional teams, orchestrated by Marketing, are turning around topical communications that would have taken weeks previously. These are focused less on traditional product messaging and more on real–time client-centered choices that allow them to feel more in control. Client messaging is more relevant, better targeted, quicker to market and aligned across the firm.
  Impact: Greater client satisfaction, increased loyalty/retention, better prospecting. Savings in SME time and (ultimately) Compliance and Marketing bandwidth.


  

• Focusing only on what is critical for clients is reducing waste.



  The need to prioritize client needs has forced firms to align on the strategic purpose of every client-facing activity, meaning low-value non-essential projects are being abandoned—probably for good.
  Impact: More discipline in triaging projects based on likely client return.
  

• Investment in client insights is paying off.



  Understanding client needs is critical to success in the crisis, guiding a firm’s strategy, messaging agenda and sales priorities, and keeping it ahead of competitors. Real-time digital measurement is making firms more agile when they need it most.
  Impact: More efficient use of resources, more effective client engagement.



• Firms are finally realizing ROI on CRM systems and other engagement IT, affording both more sophisticated knowledge of clients and better internal alignment

  Managers have invested for years in technologies that have never quite lived up to their promise—typically because of poor Sales buy-in or weak C-suite sponsorship. Firms are finally leveraging the Marketing capabilities of these platforms and their power to transform the client relationship model
  Impact: Lower cost Sales & Marketing model. Realization of technology investment.
  

For all these reasons, the industry is not going back to the way it was. For leaders who accept this, the coronavirus crisis—for all of its terrible costs in human and economic terms—presents an opportunity to push forward and press their digital transformation agenda.

The challenge now is to extend these changes into a broader reassessment of the investment management operating model, We are not returning to a world of lavish industry conferences and constant air travel, so we need instead to invest in what has been working during the crisis, reallocating resources across Sales, Marketing and Product away from the costly in-person model towards a digital and virtual centered one.

This is urgent, particularly for managers who have struggled in the crisis either because they failed to invest adequately in digital marketing capabilities, or because these were not properly integrated into their engagement processes. The truth is only a handful of firms have been able to implement these strategies comprehensively, and in subsequent posts we’ll be exploring ways that other firms can transition to this model.

For forward-looking managers, digital-first client engagement is emerging as a key point of competitive differentiation at a time when client loyalties are being tested and money is “in motion.” Firms that have pivoted to these strategies are uniquely positioned to pick up business for those unable to adapt and maintain client relationships amid this new reality.

For these firms, it is time to step on the accelerator with these programs and press their advantage.

Larry Black, Managing Partner
larry@blackmosspartners.com