For Asset Managers, The Profit Is In The Relationship

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The following is a guest post by Dan Sondhelm, CEO of Sondhelm PartnersThis post originally appeared on the Sondhelm Partners Blog.

The economic pressure that has weighed down asset managers over the last couple of years will continue to mount in 2019, especially as the tide of market-induced asset growth subsides. The established industry trends – rising passive inflows, fee compression, increased regulation, continuing platform rationalization – are inescapable, threatening profit margins of the least prepared asset managers. In response, firms are intensifying their efforts to streamline distribution costs and improve their offerings, but many still fall short of differentiating themselves among financial advisors, which could be the ultimate key to sustainable profits in this shifting landscape.

Transactions vs. Relationships

With the massive influx of new entrants and products over the last decade, the offerings of asset management firms have largely become commoditized, making it more difficult to differentiate themselves. To make matters worse, many firms are still vested in building transactional, product-based relationships with advisors. As long as sales and marketing teams continue to focus on product features and performance, they will veer further away from what advisors deem important in a relationship. The resulting communication gap can be too much to overcome for firms vying for the attention of advisors who have become much more discerning in their choice of partners.

Conversely, firms that focus their efforts on understanding the needs and preferences of advisors are effective at retrofitting their marketing and distribution processes to gain access to decision makers and maximize the impact of their interactions with advisors. Their goal is to create more individualized experiences by gaining the insight that enables them to provide the right information and the right offer at the right time through the right channel. Suddenly, one-sided communications turn into a dialogue with advisors that ensures ongoing access and the creation of additional value.

What Financial Advisors Want

Advisors are facing many of the same challenges as asset managers – fee pressures, the growth of robo-advisors and passive investing, increasing regulations, thinning profit margins. For many advisors, their business models have come into question, with many having to adjust for new fiduciary standards and compensation models. They too need to clearly differentiate themselves by adding value, with many trying to make the shift to solution-oriented or goals-based investing.

Fact sheets and pitchbooks, while important for product education, are of little use for advisors looking for support in retrofitting their practices to compete in a changing advisory landscape. Asset managers must be able to provide value with each interaction, whether it’s providing them with unique perspectives on the market, updates on industry trends or personalized programs to help them build their business. The more personalized or customized the interaction, with a true back-and-forth dialogue, the greater the value to the advisor. At the end of the day, advisors are looking for partners in their success who can help them add value in their own client relationships.

To Stand Out, Asset Managers Must Invest in Relationships

With a vast expanse of funds to choose from, financial advisors are really no different than any consumer who has choices. In the digital age, consumers have come to expect a more personalized buying experience, especially in the way they communicate with marketers and sellers. Gone are the days when marketers create and force the message onto consumers. Digital technology has empowered consumers, and advisors, to dictate through their preferences and expectations which messages they want to receive and when and how they receive them. More importantly, they are in complete control of how, when and to whom they will respond.

At a time of rapid change, innovation and heightened competition, asset managers must invest in ways to better understand the needs of advisors and thoughtfully choose the right channels for interacting with them. With the marketing automation technology and data available, asset managers can more easily initiate a dialog, targeting the right advisors and matching relevant content with their interests and channel preferences. It requires an investment but, because the profit is in the relationship, the ROI can be significant.


Dan Sondhelm is CEO of Sondhelm Partners, a firm that helps asset managers, mutual funds, ETFs, wealth managers and fintech companies grow through marketing, public relations and sales programs. 

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Rachel is a Product Marketer who started out with us through an internship in the summer of 2018. Holding a BBA specializing in Marketing and French, she has 8 years of marketing experience within various industries. A native Oklahoman, Rachel fulfilled a lifelong goal in the Spring of 2018 when she moved to "The Windy City". In her spare time she loves traveling, going to concerts and festivals, and cooking (and eating) delicious food.

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