A new study released by Troy, Mich.-based J.D. Power found that the better an asset manager’s online presence, the more likely a financial advisor will be to invest their client’s assets with that firm.
The need for a digital presence has been increasing over the years and has become even more essential after the COVID-19 pandemic when many turned to fewer in-person meetings. Beyond that, many turned to online resources because of their ease to access information.
For three years, J.D. Power has conducted its annual Advisor Online Experience Study to take the temperature of advisors to determine how asset management firms are doing with their online presence and where they are falling short. An online presence can define everything from a firm’s website to its online portal and communications system.
“We were looking to understand how these brands delivered on the digital experience and met the needs of financial advisors,” said Michael Foy, senior director and head of Wealth Intelligence at J.D. Power.
Initially, the study determined the overall satisfaction score for the 18 asset managers that were the focus of the study. To do that, the more than 2,300 advisors who were surveyed provided a numerical score for each firm based on four categories. Those categories included visual appearance, ease of navigation, speed, and the quality of the content. They also had to provide an overall score, according to Foy.
J.D. Power then calculated those numbers to come up with the firm’s overall score out of 1,000 points. However, only 13% of the 18 firms involved scored above 801.
The study found correlations between the success of a firm’s online presence and an advisor’s comfort level with investing further with that firm. The study found 91% of advisors said they were extremely likely to increase investments with those companies that scored more than 801 points over the next three months,
On the flipside, only 40% of advisors were willing to increase their client’s investments with a firm that scored less than 800 points, the study found.
“There is a huge correlation to how likely advisors would be to invest their client’s assets with that brand in the next three months [based on their online presence],” Foy said.
One of the major disparities in which firms landed on the top of the list and which ones did not, had to do with the size of the firm. The study found that the average score for firms with more than $1 trillion in assets under management was 657. The number is lower for those with less than $400 billion in assets under management. Those firms had an average score of 617.
“The gap in website satisfaction between small and large asset managers is widest in the areas of research information and content, availability of client-specific information and material, and researching product offerings and information,” the firm said in a statement.
The good news for these lower-scoring companies, according to Foy, is that the biggest problems the survey found are fairly inexpensive to improve. He said firms should ensure easy navigation to the most critical information or content on the site. An example would be to make it easier for users to go from the homepage to the client only material or have easier login access.
Another drawback advisors found with the asset management firm’s websites had to do with their ability to differentiate themselves. One area that is lacking pertains to providing education components for advisors. Advisors want to see more educational elements they can use themselves as well as ones they can turn around and use with their clients, Foy added that the format of these components is not as important as the quality of the information.
The website is a wonderful opportunity for firms to speak directly to advisors and investors, Foy said. Here firms can explain what sets them apart from their competitors. It is an opportunity for the smaller firms to stand out from their competition including the larger firms.
“The firms are really trying to use the online experience and website to clearly highlight their differentiated value experience,” Foy said. “It feels like brands are not really doing a great job with that.”
It is unclear why there is a disparity between the larger firms and the smaller ones. There is not one clear distinctive reason, but could be a combination of several, Foy said. He speculated that one reason could be that the larger firms have more resources which could allow them to focus more on their website.
It could be related to a firm’s priorities. A firm, for instance, that focuses more on third-party distribution might be more focused on its website for advisors as opposed to a firm that just concentrates on managing its investments, Foy explained.
J.D. Power conducted the Advisor Online Experience Study online between June and August through an online poll. Foy said the origins of the survey came about in 2019, when the firm was looking initially to measure brand satisfaction among advisors. However, after market research it was determined there was more of a need to track the effectiveness of asset manager’s online presence, according to Foy.