Investing Becomes ESG Investing

In its 2019 ESG Survey, Callan documented the growing commitment of institutional investors to ESG investing. 41% of survey respondents claimed to incorporate ESG factors in their investment decisions, a share roughly double that of five years earlier. 

For that 41%, “integration” was the most widespread form of implementing ESG. “Integration,” as defined by The Principles for Responsible Investment is “the explicit and systematic inclusion of ESG issues in all investment analysis and decision making.” This is distinguished from other more rudimentary forms of implementation such as screening out specific investments or hiring ESG specialist managers. With “integration,” the boundary lines between investing and ESG investing begin to blur, elevating ESG to an essential valuation measure across all investment decisions.

Fast forward to last week. In two open letters, Larry Fink, the CEO of BlackRock, the largest asset management firm in the world, put CEOs of companies that BlackRock may invest in and clients whose money BlackRock is responsible for, on notice. He was taking the next step in ESG integration.Going forward, BlackRock intends to “put sustainability at the center of our investment approach.” “Sustainability-integrated portfolios,” the letter continued, “provide better risk-adjusted returns” and so “sustainability will drive the way BlackRock manages risk, constructs portfolios, designs products and engages with companies.” Fink also pointed out that “sustainability extended beyond climate to questions around how each company serves its full set of stakeholders, such as the diversity of its workforce, the sustainability of its supply chain or how well it protects customers’ data.”

With these letters, BlackRock marks a watershed moment not only in the history of ESG adoption, but in the evolution of investment management. It is the moment when the world’s largest investment manager explicitly conflates profitability with social responsibility in the valuation process. We expect that this boldly stated position and the actions derived from it will resonate throughout the asset and wealth management worlds as investment product manufacturers and consumers live out its far-reaching implications. 

How to Surprise, Delight and Retain Wealth Clients

What determines whether a high-net-worth client stays with or leaves an advisor? Recent surveys of high-net-worth individuals ranked the top reasons they stick with or ditch their advisors. In neither case was performance the most important driver of behavior, although it is still an important factor. However, service and responsiveness topped the list.

Client experience is key to retention

Client retention depends on a satisfying client experience. Here are three things you can do to make a good impression.

1.      Establish formal customer service standards, and monitor compliance. Set guidelines for all client touchpoints, for example, indicating time frames for return phone calls and emails and when and how often to schedule in-person meetings. Then hold team members accountable for maintaining firm standards.

2.      Be flexible in how you communicate. Take note on how clients prefer to communicate, leveraging technology for those comfortable using it. The important thing is to be responsive.

3.      Be a good listener. Practicing the art of active listening strengthens your ability to provide good ideas and advice. Skills for active listening include periodically asking questions to keep an active dialogue and clarifying assumptions to make sure you understand what your client is saying and their feelings about the topic. Be supportive, not judgmental.3

Your clients want to be respected and supported throughout their quest toward achieving their financial goals. Dedicating resources for providing a superior client experience can go a long way toward building loyalty and maintaining relationships that endure through all types of market and performance environments.

1 Advisory Firms in 2030: the innovation imperative, John D. Anderson, SEI, August 2019 in association with FPA.
2 When Millionaires Change Advisors, April 2, 2018©, Spectrem Group.
3 What Great Listeners Actually Do, Jack Zenger and Joseph Folkman, Harvard Business Review, July 14, 2016.

New Year, New Decade, New Client Experience

As we start a new year and a new decade, we embrace new marketing pillars that will dictate future growth and success. We have made our 2020 Marketing Resolutions and they revolve around the client. In this fast paced, competitive environment, navigating client needs has become much more complex. We resolve to focus on the client and their needs and create more personalized experiences while delivering superior service. This focus will ultimately build more meaningful relationships with the right customers and ensure their satisfaction. 

Client Experience – Empower clients and their journeys. 2020 is about omni-channel delivery; clients demand service in-person, by phone, on desktop, mobile, and tablets and through social media. Clients want to connect on the channel that is most convenient for them 24/7 and when they connect they expect to be “served.” The goal is to ensure that every touch point a client has with your brand tells your story and delivers an experience that makes your organization stand out from the competition. Think ahead, be proactive and anticipate client needs by integrating all marketing channels seamlessly to ensure you have a happy, satisfied client.

Personalization – Although this is not a new concept, this year raise personalization to new standards, fueled by AI and machine learnings. Consumers have learned to tune out generic marketing and are responding to ads tailored to their needs, interests, preferences and behaviors. Personalized messages create a connection between your brand, products and your target market.

Technology – We live in a fast-paced digital world and must embrace technology and digital advancements. Innovation and growth require access to deep data and the technology to apply this data to sales and relationship management. In order to meet today’s marketing challenges head on, data and analytics are critical to building and enhancing communication, identifying market opportunities, improving targeting and creating digital solutions.Whether it’s creating a new logo, refreshing your website to improve user navigation to make content easier to find, adjusting your e-mail campaign strategy by segmenting target audiences to send them personalized messages, or adding engaging video content to your social media channels, now is the time to start implementing these three key marketing factors as they determine where the industry is going in 2020 and beyond.

The Big Blue Splash


Since 2000, Pantone has been selecting the Color of the Year. On its website,, you can find information on the color of the year for each year since its inception, although it wasn’t as big an event as it is now. 

In 2000, even designers weren’t paying much attention to the color of the year. As time went on, the announcement became more and more well-known to the general public. Fast forward two decades to the December 4, 2019 announcement of Classic Blue as the 2020 Color of the Year, and every news outlet including CNNTimeFast Company and The New York Times wrote about it. 

And what an announcement it was. Keeping with the current marketing trends, Pantone made it a full-blown experience—blue cocktails, blue food, blue music and a blue fragrance. At the end of the day, the Color of the Year is a marketing opportunity for Pantone, so we can safely assume next year will be an even bigger extravaganza.

The Pantone Color Institute explains “Instilling calm, confidence, and connection, this enduring blue hue highlights our desire for a dependable and stable foundation on which to build as we cross the threshold into a new era.” Traditionally, blues are thought of as calming, peaceful and trustworthy, which is why you see blue used widely in the financial services industry, sometimes making it difficult for firms to stand out in a literal sea of blue.

The selection of Classic Blue makes sense as we enter a new decade—there’s a lot going on around the world! So, it made us wonder: what is the correlation of Pantone’s Color of the Year to the financial markets. For instance, at the end of 2008, what color won? Interestingly enough (to us anyway) the Color of the Year for 2009 was Marigold, chosen because “In a time of economic uncertainty and political change, optimism is paramount and no other color expresses hope and reassurance more than yellow.”

Pantone’s Colors of the Year Against the S&P 500 December 1, 1999 – December 6, 2019

When It’s Time to Shift Gears

By now you may have seen or heard about the Peloton ad, “Grace in Boston,” which went viral. If you haven’t, a simple Google search will get you up to date. A loving husband surprises his already fit-looking wife with a Peloton bike for Christmas. She documents her yearlong workout journey, then thanks her husband by sharing the videotape of her transformation. 

Peloton received a lot of backlash (and its stock price temporarily dipped) because the ad was felt by many to be sexist and demeaning. Did Grace actually want the bike asked some? In response, Peloton issued a statement about how they “were disappointed in how some have misinterpreted the commercial.” 

Peloton has an opportunity to learn from this experience and create unquestionably clear and compelling messaging to:

Empower by solving a problem. Ads that demonstrate how the Peloton helps riders take control of their health and well-being in a variety of circumstances could be more powerful, for example enabling moms to squeeze in a workout when they get home from work or when their toddlers are taking a nap.

Speak to a lifestyle of wellness, not necessarily wealth. Social media comments referenced the unattainable lifestyle depicted in Peloton ads, with bikes shown in multi-million-dollar homes overlooking multi-million-dollar views. Recent ads showing riders in a range of different locations and circumstances are more relatable and widen the audience.

Be inclusive and diverse. Grace starts her journey young and fit, so the narrative isn’t as impactful. Peloton has other stories to tell, with leaderboards filled with 50, 60 and even some 70+ year-olds keeping up on their rides. Showing a wider array of Peloton riders makes the experience more accessible and allows more viewers to relate to what Peloton could do for them.  

Peloton’s stated mission is to use “technology and design to connect the world through fitness, empowering people to be the best version of themselves, anywhere, anytime.” By shifting gears with inspiring ads that speak to this mission statement, Peloton can get back on track.

‘Tis the Season of Giving

A great American tradition is to give back whether one donates time or money. After kicking off the holiday gift season with Black Friday and Cyber Monday, many individuals and families celebrate the chance to give back on Giving Tuesday. This is a great opportunity to engage with clients, since December 31st is their last chance to give to a charity in order to qualify for 2019 tax benefits. 

While the tax break may not be their motivation for philanthropy, helping clients utilize and employ tax-smart strategies can maximize the benefits of giving and stretch the value of the gift both for the charity and for their own personal finances. With the new tax laws and higher standard deductions, it is crucial to help clients be strategic and plan to be as effective as possible with donations. 

Some areas where you can help your clients:

• Deciding how to give. Different types of donations, such as cash, highly appreciated assets, and real assets, offer certain advantages and drawbacks and depend on their own personal situation and holdings. 

• Ensuring that they are giving to a true charity, as not all non-profits qualify for charitable status under section 501(c)(3). 

• Reminding them to maintain receipts from the charity/organization.

• Itemizing tax deductions in order to realize the full tax benefit of donations. 

By helping your clients give smart this holiday season, you can help them achieve their philanthropic goals and reinforce the value that you add to relationships, a win-win situation for your clients and you.

Structural Support for Active Management

It appears that the train might be finally leaving the station for “non-transparent” ETFs, ETFs that combine active management with ETF trading liquidity, but without the same transparency regarding underlying holdings. Last week the SEC gave preliminary approval of applications for “non-transparent” or semi-transparent strategies from fund giants T. Rowe Price, Fidelity, and Natixis as well as start-up specialist firm, Blue Tractor. Getting the imprimatur from these industry leaders may go a long way to accelerating their acceptance among advisors, for whom opaqueness is typically a red flag. 

Additional encouraging news for the prospects of these innovative product structures comes from a recent survey by Broadridge Financial Solutions. Of 200 financial advisers surveyed, an impressive 85% said they are likely to use actively managed non-transparent ETFs. 63% of respondents said they anticipate reallocating assets from actively managed open-end funds to the new ETFs.

Looking forward, it will be interesting to see how much non-transparent ETFs cannibalize existing mutual fund assets versus how much they contribute to new sales of active strategies. While advisers are clearly comfortable with ETFs and well aware of their advantages, it may take a bit of time to understand the relative cost, tax and trading benefits of the new non-transparent ETFs and to decide whether the good sufficiently outweighs the bad. 

As it stands now, the prospects for this new structure appear bright, and it would be hard to deny that active management could use all the help it can get in today’s passive driven marketplace. 

A very merry Starbucks (brand)

Yep, it’s that time of year again. Starbucks has released its eagerly anticipated (at least by some) series of holiday themed cups, along with a lineup of holiday drinks, such as Peppermint Mocha and Caramel Brulée. Since 1997, Starbucks has released a series of holiday cups, with varying degrees of controversy attached to them. Some were too Christmas related, some not enough. Perhaps playing it safe in a world where social media opinion rules, this year’s set seems to have landed without too much contention or hot debate. They are all red and green and evocative of holiday wrapping paper, with heavy use of the word “Merry,” a sentiment with which it is hard for anyone to disagree, leaving aside Dicken’s Scrooge, of course.

There is no denying the holiday cup reveal and subsequent use has become a ubiquitous part of the Starbucks brand. Instantly recognizable, cheerful and, most importantly, containing some sort of appealing beverage, what’s not to like? Consistently meeting expectations and trying hard to improve the customer experience (has anyone noticed the cheerful greetings Starbucks’ professionals now typically give when someone enters the store?) at all points supports the company’s goal of being a destination location that, although global in scope, gives you a feeling of your neighborhood hangout.  

Election Marketing

As you drove into work today, Election Day, perhaps you paid special attention to all the lawn signs along the way. Or maybe you didn’t—which wouldn’t be surprising. When there are seas of signs (let’s call them marketing messages), all congregating in one spot, it’s hard for us to decide which are worthy of our attention and which are not. This is why design is so important. 

There are signs with bright colors, big white type and small messages. Then there are the signs we notice: simple and stark with a white background and a high contrast color for the message. But these may be the signs on your neighbors’ yards, people running for Planning and Zoning. National campaigns, with more dollars to spend, tend to be bigger, bolder and better designed.

Candidates understand they need to be a brand, one that stands for something. Presidential slogans date back to the 1840s, with “Tippecanoe and Tyler too” rolling off the tongue, and have evolved over time to catchphrases such as “Keep Cool with Coolidge” and the memorable “I like Ike” slogan. It wasn’t a logo, but it felt like one. Slogans and logos are a big part of national campaigns. Hillary Clinton’s logo for 2016 was criticized for being too corporate, especially as compared to Barak Obama’s logo which was friendly, yet strong and forward looking. Both Clinton, Obama and many other candidates use patriotic red, white and blue, something new candidates are starting to steer away from (Warren and Ocasio-Cortez are recent examples). 

Websites are also a very important part of a candidates’ brand, just as for any company. Joe Biden’s website homepage is bright and clear, an excellent example of how white space can focus a user on a message. Elizabeth Warren’s website uses video in the background but fails to show us what they are selling (her) by using a dark overlay. The design of these two websites next to each other, as well as Donald Trump’s, are a great example of how a website can set a perception of a person or company just on the home page. 

With another year of hardcore campaigning in front of us, time will tell who will come out on top, but we can guarantee design will play a huge role in every campaign, just as it does (and should) for every company.

Securing Client Loyalty

A recent survey conducted by EY revealed that about one-third of high-net-worth clients are considering switching advisors over the next three years. Many are looking for greater value and some are questioning whether fees based on assets under management are fair. High-net-worth clients often work with multiple providers to meet different needs, so they can compare, and they are also considering leveraging technological solutions. 

What can advisors do to prove their value and improve satisfaction to secure client loyalty?

Provide high-touch service. Clients want advisors to be proactive and responsive. Nearly 50% of high-net-worth clients surveyed by Spectrem Group, said they would consider changing advisors if their calls or emails were not returned in a timely manner. Clients want a greater level of personalized attention that anticipates their needs.

Educate clients, including the next generation. Clients knowledgeable about wealth planning are more likely to appreciate the value their financial advisor provides and less likely to consider switching. Building a trusted relationship with clients’ heirs can help advisors retain relationships when intergenerational wealth transfers occur.

Solve your clients’ problems. Many wealth clients seek financial advice beyond the traditional wealth goals of saving for retirement or a college education; they’re looking for information about trusts and estate planning, philanthropic giving and teaching their children about managing money. Many say they also need help budgeting and establishing savings plans.

Help your clients through transitions. When clients go through a major life change, such as starting a new job or a new business, getting divorced or losing a spouse, they’re in greater need of holistic wealth planning; it’s also a time when they’re more likely to consider changing advisors.

Provide convenience and develop tools clients want. As we transition into an increasingly digital world, more people are leveraging digital technology such as apps to conduct business, including managing their wealth.

Sources: 2019 Global Wealth Management Research Report, EY ©2019 Would They Stay or Would They Go? Advisor vs. Firm Loyalty, a Spectrem White Paper, Spectrem Group ©2017