[The asset management industry is at an interesting crossroad facing major waves of change. One study by Indefi projects that five secular transformations will be reconfiguring the industry and changing established wisdom that has guided business decisions for decades:
• globalization trends will refocus to local
• expanded investment toolkits including digital assets will blur public and private asset classes
• AI to achieve a tipping point reshaping investment and distribution functions
• returns will be refined to non-financial alpha like ESG/Impact or retirement income certainty superseding peer rankings and benchmark-relative returns
• individual investors will dominate over institutional channels with retail channels growing from 45% in global AUM in 2014 to 67% by 2030 and the institutional channel dropping from 35% to 26% by 2030
These are massive changes that will spur ongoing innovation, particularly in fund distribution. The latter fact of individuals dominating the future alone could disrupt the distribution efforts of many asset management firms. However, there are additional vectors for consideration as well. The dramatic increase in investment options, combined with fee pressures, and the continuing growth of smaller independent RIA firms coming into the market have created a challenge for asset managers to do more with less. And while we see some of the major firms start to address these challenges with digital advertising, practice management tools, and major investments in data and data feeds, many challenges remain.
To better understand ways to address some of these frictions inside modern asset management distribution, and how firms can adapt, we reached out to Institute Members Jack Swift, president and CRO and Erez Yereslove, COO/CMO, Asset Management of TIFIN — an AI-powered FinTech company that leverages data science, investment intelligence, and technology to help deliver engaging and personalized investor experiences. They just announced their new SaaS solution aimed at combining marketing, data science, and sales enablement capabilities to drive more intelligent distribution for their forty-plus partners in the asset management industry.]
Bill Hortz: What was your motivation in launching your new asset management distribution platform? What are the industry challenges that you are specifically working to solve?
Jack Swift: My observation over decades-long experience as a leader in the asset management category, and what we have heard and verified from over 45 of our current asset manager clients, is that while asset managers receive significant amounts of data through the purchase of data packs, they struggle to process and analyze the data in a way that is useful for their sales and marketing teams. While some of these larger asset managers have data science teams and business intelligence groups, many do not. TIFIN is bringing business intelligence to asset manager distribution.
Erez Yereslove: Marketing teams and sales teams tend to operate in silos and fail to share information necessary for learning. This is an experience I have seen first-hand as CMO in and outside of the industry. In response, we have built an intelligent approach to asset manager distribution by bringing artificial intelligence into every aspect of the sales and marketing process to drive awareness, generate signals, and nurture prospects to significantly increase the probability of closing. We saw the opportunity to leverage modern AI/ML techniques to provide an AI-driven distribution edge to our partners.
Hortz: How did you approach those challenges? What was your thinking behind your first steps in tackling these issues?
Swift: Our first steps in tackling a new intelligent approach to distribution in asset management was to build a natural language driven search engine called Magnifi. It took us a year to generate the first 1 million search results at Magnifi. Today we generate 1 million results every 3 days! The searches by advisors and self-directed investors generated tremendous amounts of data that allowed us to build a data lake, identify signals, and build algorithms to nurture those signals. Now Magnifi is over three years old and we have built TIFIN Wealth which is a container for advisors that enables them to work on their clients with risk tolerance, personality type, financial planning, and charitable giving needs, among other things. Also with TIFIN Wealth, we were able to generate significant amounts of data to train our models to build very robust intelligent layers to generate signals, distribute content, and nurture prospects.
Yereslove: All of this is working on solving the issue of classic asset manager distribution which is particularly inefficient. Asset managers cumulatively spend over $64 billion a year to distribute their products. They currently do this with little to no business intelligence being applied to any sales and marketing activity. The dating equivalent to this is going to the local bar and randomly hoping to meet someone who is a match for you. To further develop the analogy, consider that TIFIN brings in “intelligent matching” which is much more consistent with eHarmony, Netflix, Spotify, Stitch Fix, and many other modern marketplaces to the asset management space.