[Disruption breeds change, but the right kind of change is driven by building from your customers’ needs and perceptions. In a business environment of accelerating change, it is especially important to continuously challenge your core business assumptions to ensure that they are still relevant to the needs of your clients. Remember that however brilliant you may think your new service offering may be, it only becomes a true innovation when your chosen course of action gets enthusiastically adopted.

To enhance the effectiveness of your engagement efforts, you need to stay close to your customers and prospects—going deep by asking the right questions and listening very carefully. Your return-on-investment (ROI) is incumbent on the amount of time and depth that you go into researching and understanding the unmet needs of customers as they are tackling the growing disruption around them.  

To that end, we reached out to Institute member Bill Sheldon, SVP of MarketBridge, to dig further into their recent research study, Consumer Perceptions in Investment Management. We wanted to understand what they uncovered as to changing consumer perceptions amid FinTech and other disruptions and their recommendations on how to engage your customers and prospects with the change they want to see.]

Bill Hortz: Can you walk us through how you developed and conducted your research?
Bill Sheldon:
As you may recall, we launched a comprehensive study last fall on FinTech Disruption within the Financial Services industry, which resulted in the creation of our FinTech Disruption Toolkit report. The design point for that research was to identify opportunities for financial services incumbents to leverage their inherent Go-to-Market advantages to forestall disruption from new market entrants. 

We analyzed the entrant and incumbent strategies of over 100 financial services and fintech companies across investing, banking and payments, and insurance to identify potential insights and strategies which incumbent firms can leverage to thrive through this disruption.   

As a part of that analysis, we also conducted more than 1,500 consumer surveys across investment management, banking, and insurance consumers to help connect those business strategies to consumer preferences in these select sub-segments. You know, technology enables disruption, but the real driver of disruption is unmet (or under-met) customer needs.  

So, we designed the investment management consumer survey as an example of the type of in-depth research FinTech incumbents need to conduct to understand their changing customer needs and preferences. 

By further interviewing more than 500 investors across age groups and income ranges, we identified the impact that disruptors―like Betterment, Wealthfront, Robinhood and others―were having on consumer preferences, and more importantly, identify what Go-to-Market advantages should be leveraged by incumbents to secure market position and maintain growth in the face of this disruption.

Hortz: What were the major findings you uncovered from your research on how consumers are navigating investment management options and services?
Sheldon:
Frankly, we confirmed a lot of what many investment managers likely know or suspect which is that younger investors prefer digitally centric firms―indeed 50% of our respondents between 20 and 39 use an online/digital firm―versus the 60+ investors who are three times more likely use a large national firm. 

Likewise, younger investors tend to be less loyal to their investment firms than older investors. Our survey found that 70% of young consumers would switch to an online-only firm with lower fees, 71% would open an investment account without speaking to a person, and that 67% trust robo-advisors (compared to 37% of older consumers). Investors under 60 are five times likelier to have switched or considered switching investment firms in the past 12 months. 

We also found that, regardless of age, there are some “table stakes” value propositions that are still important for most investors, such as a trusted brand name, a firm that can be used for many years (in spite of the above-noted switching behavior) and a firm that provides the “most value.” The good news is that these “table stakes” can be significant sources of Go-to-Market leverage for incumbents to counteract disruption from new entrants―what we referred to as Platform Advantage in our Disruption Toolkit report. The built-in security, trust and authority of an established brand provides strong emotional value to customers to validate investment management choices and cement loyalty.

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