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How to market to financial services

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The financial services industry continues to grow at a healthy clip due to the overall expanding economy, according to analysts and insiders. And with the baby boomer generation now reaching retirement age-though a recent Merrill Lynch & Co. survey says a majority of boomers plan to work well into their 70s-there's no sign of this growth letting up.

"Right now, retail brokerage and assets under management are up; so are M&A and insurance activity," said Samantha Lucas, managing director and head of the b-to-b practice for Burson-Marsteller, New York. "However, there are some significant issues that need to be addressed for financial services companies to ensure long-term health and, in some cases, survival."

Over the past few years, Lucas has witnessed many businesses that have improved their revenue and margins by implementing cost controls-with much thanks to vendors that provided solutions for them. Now, many in the industry are focused on growth. "There has been a rash of acquisitions in the financial services industry to create growth, but all companies are facing the reality of having to create organic and sustainable growth the old-fashioned way-by finding new revenue sources and attracting new customers," Lucas said. "And these firms have to figure out how to do this in the midst of brutally competitive markets, at home, abroad and globally."

Tremendous opportunities

Such an environment presents tremendous opportunities for marketers, specifically those offering new, diverse types of funds that will appeal to brokerages and investors alike, technologies that streamline and simplify operations and transactions, and marketing-oriented products and services that will help brokerages and banks reach and engage new clients. "The business of finance is changing from being a largely transactional and opaque business to being a relationship-oriented, transparent partner to clients and customers [business]," Lucas said. "Savvy marketers will help finance firms forge stronger, more meaningful relationships with their customers and help them further differentiate themselves to prospects."

What brokerages want

So what products and services are the major brokerages looking for specifically?

The hot investment choices right now are simplified employee pension (SEP) accounts, fund of funds (a mutual fund that invests in other funds), hedge funds and individual stocks, said Todd Baird, branding director for Boston-based marketing communications agency PARTNERS+simons. If you can provide a brokerage with a new, different choice in any of these areas, you can probably get your foot in the door fairly easily, he said.

"Some of the bigger brokerages and banks are providing a broader suite of wealth management services for extremely high-net-worth clients," Baird added. "And I have even read where one firm is providing educational financial seminars to their clients' children in a brilliant attempt to secure loyalty from the next generation."

Also, brokerages and banks are beset by increased industry regulation, Baird said. "Sales practices on both sides of the equation-asset managers and retail brokerages-are being scrutinized more closely," he said. "Fees are shrinking and research fees are being separated [because of client concerns]. Variable annuity sales practices are under investigation, as are hedge funds."

This means that help is sorely needed in terms of processes and technology to maintain compliance. "Opportunities exist across the entire business spectrum," Lucas said. "For instance, in the last 15 years, financial services has become an avid and innovative consumer of technology to automate and streamline many back-office transactions and processes. And at the customer end, there are any number of customer relationship management opportunities."

But working with financial services firms on these programs has to include an element of education and appealing to the right influencers, Lucas said. "These firms are still coming to terms with the fact that marketing is a way of life now," she said.

Internet marketing exploding

One company banking on the industry's demand for better marketing tools is Web analytics firm Poindexter Systems. "The financial services industry is exploding in its growth of Internet marketing," said Jason Shulman, exec VP-sales and business development for Poindexter Systems. "We specialize in delivering real-time, audience-based predictive marketing technology and services that help reach their prospects and customers more effectively online."

Shulman sees incredible growth in online marketing by mortgage lenders, auto insurance companies and Internet-only banks such as E*Trade and ING Direct. "They're already aggressively using the online channel, while more traditional financial institutions are just waking up to the sales opportunities on the Web."

Surprisingly, considering the nature of the company, Poindexter Systems' best tactic to market itself to the financial service industry has been word-of-mouth, Shulman said. "We started out marketing ourselves to one prospect at a time; and as our reputation grew, we attracted other firms to us, he said. "We've been invited to speak at several financial services forums, such as the DMA Annual Financial Services Conference, which has built the buzz. And we have taken our show efforts online by offering educational webcasts with such strategic partners as the American Marketing Association and SAS."

Building word-of-mouth and getting invited to speak at industry events is easier said than done. PARTNERS+simons' Baird offered several constructive tips on how to reach and engage the industry's major brokerages and banks:

When selling a fund or other investment product, build a strong consumer brand that will get their attention, Baird said. "When enough clients call their brokers asking about a fund, then the brokerage firm will need to respond and add it to their platform. Tout the performance of the fund, but performance is really only the beginning of your messaging. Promoting your speedy and flawless service to both the broker and the end-customer will turn heads."

Sell your solutions to the senior management first. Once they have approved your products for the selling platform, the key to success is to promote the product and earn the favor of the individual brokers inside the organization, Baird said. One way to increase awareness is to be visible: Place ads in in-house newsletters, and create e-mail and direct mail programs to promote products and features. Many of these types of communications require the approval of firm management before distributing to the broker.

Be mindful of this approval cycle time. "Targeting the smaller universe of major brokerage houses requires face-to-face presentations to initiate the relationship," he said. "In between meetings, however, personalized direct marketing that provides information and insight the prospect needs will be appreciated and help make a product more favorable. Marketers should be careful to balance valuable information with selling messages. Too much selling in these communications will be off-putting."

Burson-Marsteller's Lucas emphasized that whatever tactics marketers use and whoever their targets are, they first must be educated about what drives the top- and bottom-line growth of their prospects. "All of that information is easily available, so there is no excuse for a `spray and pray' approach to marketing to this industry," Lucas said. "When you approach financial services companies with insight and answers to their most pressing issues, the conversation becomes less about `how much' and more about `how soon can you start?' "

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