How to market to financial services

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To say that the financial planning industry is a highly fragmented, complex market that marketers struggle to get their arms around is a vast understatement. The largest industry association, the Financial Planners Association, represents less than 30% of the market, and no single organization tracks all the industry's segments.

In a nutshell, four tiers of financial planning or advisory companies comprise the bulk of the industry, said Suzanne Fitzpatrick, associate publisher of Investment News, a weekly newspaper and sibling publication of BtoB .

The top tier consists of the major financial brokerages, or "wirehouses," that maintain corporate offices and employ broker representatives in local offices. The 600-pound gorillas in this tier are companies such as Merrill Lynch & Co., Citigroup Global Markets Holdings and Wachovia Securities, Fitzpatrick said.

Regional broker-dealers make up the second tier, and some of them have grown to rival the footprint of the wirehouses. In total, it's estimated these two tiers combined employ some 85,000 brokers.

The third tier comprises independent broker-dealers, generally smaller, regionally oriented organizations that maintain a network of independent brokers. These brokers get to keep a higher percentage of the investment business they generate but have to maintain their own offices.

"With the financial markets rebounding from the post 9/11 recession, more and more brokers are leaving the wirehouses to become independents and make more money for themselves," Fitzpatrick said.

Financial planning and registered investment advisory firms, regional and local companies that have no network affiliations, create the fourth tier. Often these companies will represent a wide array of financial products, including insurance, accounting services and real estate lending.

Bottom-up marketing pull

The biggest class of organizations marketing to financial planners handles stocks and bonds, mutual funds, 401K plans, wealth management systems, variable annuities and other financial products, said Andy Sonnenberg, advertising director for Financial Planning Magazine . "If they're marketing to the wirehouses and regionals, they realize that the individual brokers themselves are only influencers, not decision-makers," Sonnenberg said. "They need to gain the brokers' attention and build bottom-up marketing pull so that the corporate decision-makers add their products to the portfolio they offer investor clients."

Conversely, financial investment marketers can target independent broker-dealers and registered investment advisers directly.

The trick, however, comes in getting the attention of brokers, who are swamped with the thousands of investment products on the market. "Sales calls do work if you can get in the door," Fitzpatrick said. "But to get in the door requires you building a great deal of awareness, understanding and differentiation."

Traditional print advertising works well, both Fitzpatrick and Sonnenberg said, as do Web-based tactics such as marketing-driven microsites, educational Internet seminars and e-mail campaigns.

Other products and services in big demand from brokers, especially among the independents, are reliable and secure technology solutions-ranging from computer hardware to Ethernet networks-as well as business services, including marketing expertise.

"In particular, [brokerages] are facing a lot of regulatory demands and need software and systems to help them comply with things like Sarbanes-Oxley," said Jean Cholka, president of client services for Kanbay International, a software systems integrator. "They need state-of-the-art, tailored, reliable and secure networks, applications and databases."

Marketers targeting the major capital markets companies and brokerages with such products should focus on IT departments and procurement managers, Cholka said.

But with independent brokers who run their own offices, marketers can directly approach them through financial and general business media, Sonnenberg said.

"Financial firms-just like accountants and lawyers-have also become more savvy about marketing themselves to their clients," said Dan Spelling, owner of Spelling Communications, a public relations and marketing agency. "More and more of them are turning to agencies for help in reaching new clients. Perhaps what's most important in marketing to this industry is your corporate reputation. Financial services companies pay a lot of attention to validity and reputation, and often will only deal with marketers they feel they can trust."

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