Five Reasons Why Less Can Work Better Than More

A one pager from the IUPUI (Indiana University Purdue University Indianapolis) Lilly Family School of Philanthropy Women’s Philanthropy Institute (that’s a mouthful right there) has been popping up in our inboxes at Optima Group. It summarizes the highlights of a 36-page report “Giving by and for Women: Understanding high-net-worth (HNW) donors’ support for women and girls.”

Why does it work so well?

It’s eye-catching. The page focuses your eyes with bold colors and a large, central info graphic of a woman in red. The lack of features on the woman helps to assure that women of all ages and ethnicities can relate, without alienating anyone.

Summary of the methodology is quickly and clearly laid out (“we spoke with 23 HNW women who give $10 million or more to causes that benefit women and girls”), lending creditability to the piece right from the start; in the HNW space of big donors who are women, 23 is a significant number.

High-level takeaways are easy to find. Each of the seven key points is written in brief, compelling, informal language, set in capitals, bold and white knockout type on a bold color background; you really can’t miss them.

There are multiple levels of information. For each key point there is a brief explanation expanding on the central theme.

For those who want more, they can get it. For more detail, there is a click through at the bottom of the page that takes you directly to the IUPUI website where you can download the complete report.

This doesn’t mean that longer, more detailed pieces are not necessary. They serve an important purpose – communicating depth of knowledge and expertise. But sometimes, to catch someone’s attention, less can truly be more.

How Elite RIAs Got to be Elite

Recently, BlackRock, in partnership with IN Research, released the findings of its third Elite RIA Study. BlackRock categorizes as “Elite RIAs” those with at least $250 million in AUM scoring in the top 50% in revenue per professional and staff.

Based on survey responses, BlackRock has identified five “levers of success” that enabled top RIAs to achieve and maintain their elite stature:

•  Organizational structure and branding

•  Client targeting and service delivery

•  Investment management

•  Technology

•  Organic and strategic growth

While the last three seem to be somewhat table stakes, the first two warrant further exploration. Both can help a closely held practice serving a relatively narrow clientele transition to Elite – an independent enterprise that is poised to significantly broaden its client base.

Organizational structure and branding

The study posits that a consistent client experience is achieved through 1) systematized workflows and processes that are increasingly automated and 2) back-office tasks that are continuously streamlined. Our experience with a wide array of RIAs confirms this – consistency and efficiency helps foster growth, while also helping to create an enduring brand that is not dependent on a “star” advisor.

A firm’s brand is more than simply traditional marketing and must be supported by consistent and replicable operational processes and procedures. This enables Elite RIAs to grow both organically and to attract and/or acquire other RIA firms and more readily fold them into their businesses.

Client targeting and service delivery

When asked about success drivers in the foreseeable future, 58% of Elites pointed to retention and growth of existing clients. Elite firms better understand the value of actively cultivating their existing client base, which not only reduces turnover, but can also boost referrals. That may be because Elites have more to gain (and lose) from their bigger books, but it’s just as likely that they became Elites by actively cultivating their existing client base.

Many Elite firms focus on a flexible team approach to client service, rather than an advisor centric relationship model. This helps to provide a broader service level and reduces the risk of losing a book of business if an advisor leaves by tying the client to the organization rather than an individual.

A Brave Marketing Move: Blonde Espresso

Devotees of Starbucks, which include many at Optima Group, no doubt noticed the brief yet intense hype prior to January 9 both in store and online; “For the first time in 43 years” and “Something new is coming 01.09.18.” And there’s no way anyone could miss the entire menu board covered in PMS 123 (a yellow of considerable brightness) and large copy introducing the Blonde Espresso.

Starbucks is touting the Blonde Espresso as smooth and subtly sweet, but there is nothing subtle about its blonde campaign. Imagine this – a brand that has the audacity to cover up every other product they sell in order to promote one? Who does that?! A brand that is exceptionally confident and very well-known. It’s safe to say that most brands would never have the chutzpah to even conceive of doing this – never mind to actually do it. The Starbucks brand assumes their customers know exactly what they want when they walk into their local Starbucks which is probably true, judging by some of the complicated orders people quickly rattle off when ordering.

Many people took to Twitter and other social media to express their feelings about the new coffee. You can search #Blondeespresso to see what people are saying. The “tall blonde” jokes will get old soon enough, but congratulations to Starbucks for creating a campaign that its audience is paying a lot of attention to, and in a positive way. And for the people who don’t know what to order at Starbucks, have no fear, the actual menu will have to come back sooner or later.


Just Ask

As a communications firm, we have often surveyed wealth management clients to find out their preferences when it comes to reporting. A common response shared by mass affluent and UHNW respondents alike is simplicity. They do not want to have to search through complicated or lengthy statements to find out where they stand, why and what might have gone wrong. They instead want easy access to information tailored to address their specific questions.

Typically, reports, hard copy or electronic, are by necessity preformatted. They presuppose what the client wants to see and how they want to see it. While some reporting engines are customizable, fashioning formats or formulating queries requires understanding navigation tools and performing process steps. For many, it’s too difficult, annoying or time consuming.

Enter the digital assistant. Amazon reported selling some 20 million Alexa enabled devices just this holiday season, a testament to ballooning acceptance in the retail market. Through its cloud computing arm, Amazon Web Services (AWS), Amazon is also aggressively marketing Alexa to financial institutions. Fidelity, Capital One, Betterment and LPL are all first adopters. UBS has reportedly partnered with AWS to enable both advisors and clients to get answers to financial and economic questions through Alexa.

It’s not too far a reach to expect Alexa, or other digital assistants, to be connected soon with financial accounts, with the ability to employ artificial intelligence (AI) to answer client questions regarding holdings, performance, goal tracking, transactions, fees or other account related issues. For the client, this means immediate satisfaction to any account related question, no matter how specific.

But, as with UBS, Alexa may also enable access to the vast economic, financial and market data and research available on the internet or through leading advisory firms. This suggests that clients may turn to their digital assistant for other questions about their accounts, such as: How have I done versus market indices?

1.  How have I done versus market indices?

2. What mutual funds outperformed mine?

3. Are economic conditions suitable for my portfolio?

4. Am I properly positioned to take advantage of attractive opportunities?

The digital assistant could also provide alerts tied to planning expectations or to the personal concerns of clients. In a way, financial accounts become another thing among a smart household, that the digital assistant monitors and reports on as requested.

For advisory firms, client use of digital assistants, is likely to be on balance a good thing. It can help to increase client satisfaction and keep clients better informed. It may also encourage greater interactivity between clients and advisors. For early adopter companies that employ digital assistants and provide proprietary functionality, they may become a competitive advantage.

Three Facts About Violet

Haystacks at Giverny, Claude Monet, 1884.

In case you haven’t already heard, the Pantone Color of the Year for 2018 is Ultra Violet. The Pantone Color Institute says it “communicates originality, ingenuity, and visionary thinking that points us toward the future.” However true this may or may not be, the violet range of colors has a long and interesting history-one that may give us other reasons to worship the color for the next twelve months.

The insanity of violet

In 1874 when a band of outcast artists known as the Impressionists began their crusade against the norm, one commonly voiced criticism was their preoccupation with the color violet. In the recently published book by Kassia St. Clair, The Secret Lives of Color, she wrote “Many concluded that the artists were, to a man, completely mad, or at the very least suffering from a hitherto unknown disease, which they dubbed ‘violettomania’.” The Impressionists believed that because the complementary color to sunlight yellow was violet, it made sense that the shade and shadows in their paintings should be made up of violets.

Red and blue do not make violet

In kindergarten, we learned to mix colors. To make violet, we took the red and blue paint and mixed them in degrees to get the purple/violet we wanted. However, as described in The Secret Language of Color, by Joann and Arielle Eckstut, “Violet is a spectral color unto itself-a wavelength in the form of visible light-and the shortest wavelength visible to humans.” As we can see on the Spectral Power Distribution chart below, violet is on the opposite end from red, which is the color with the longest wavelength. Ergo, red and blue do not make violet.

Tyrian purple – a recipe for the wealthy

There’s a reason why purple was considered a color for royalty only. Tyrian or “royal” purple was first produced in approximately 1600 BC. “Nature did not provide an easy means of dying fabric purple. Historically, the production of the dye was one of the most noxious, laborious, time-consuming and expensive processes around.” (Eckstut) For this reason, only the very wealthy could afford it. In 60 AD, the recipe for Tyrian Purple (which used thousands of mollusks) became public knowledge. Emperor Nero decided only he could wear it, the crime for anyone else wearing violet was punishable by death. The recipe was lost in 1453 AD and discovered two decades later when royalty and the elite once again wore violet.

Pantone has conveniently supplied links to a plethora of violet things on Amazon. Emperor Nero’s head would spin if he knew anyone in the world could buy violet-and get it in two days with Amazon Prime!


Four Thoughts from Optima Group for 2018

As we look to year end, Optima Group would like to wish everyone a very Happy New Year. We hope you have time to relax and celebrate with your family and friends.

As 2018 fast approaches, we turn our thoughts to key issues, themes and trends for the coming year that we believe will impact the wealth and asset management industry. While by no means a complete list, based on our observations and research, we see four key trends and concerns that will drive much of what firms do in 2018.

1. Increased fee transparency and corresponding fee pressure on the manufacturing side

2. Continued search for alpha

3. Continued concern regarding cybersecurity

4. Leveraging technology to drive lead generation and sales efforts

Out in the open

The call for clarity of fee disclosure continues. That, combined with the availability of low-cost ETFs and other vehicles for just about any asset class you can name continues to put pressure on investment management fees, particularly for active managers. We believe this is a permanent shift in the investment landscape and that fee pressure on the manufacturing side is here to stay, particularly if performance lags. This trend is applicable to alternatives, where strategies that have failed to meet performance expectations have been met with increasing fee resistance.

In search of returns

Related to fee compression above is the search for sources of alpha in this long-running bull market. This has fed the trend of using cheaper products, especially for more efficient, core asset classes combined with the search for more unusual, non-mainstream asset classes, including private investments, real asset classes, etc.

You’ve been hacked

Cybersecurity and protection against fraud is top of mind for both financial services firms and their clients. End clients want clear indications that there are guards in place to protect against potential breaches, as well as the reassurance that firms are ready to respond quickly on behalf of their clients in the case of a problem. This means that service partners to wealth and asset managers, particularly those that deal with client information, such as custodians, face close scrutiny in terms of their expertise in combatting fraud.

A time to sell

Integration of technology into the sales and retention process is the name of the game. Using CRM for everything from managing the pipeline to tracking campaign results can help firms cost-efficiently step up their sales and marketing. But it requires a consistent and dedicated effort that can be hard to enforce. The rewards for those firms that do so are substantial, however.


Three Reasons They Need You More Than Ever

Recently, Nationwide Retirement Institute and InvestmentNews undertook The Planning Gap, a research initiative to help advisors better understand investors’ perceptions of retirement and identify the gap between those perceptions and what advisors actually recommend.

Besides presenting helpful insights, the research revealed several reasons advisors should take heart. Here are three that caught our eye:

1. People who plan through an advisor feel a whole lot better about their retirement prospects

Of those currently using a financial advisor, 50% say their lifestyle will stay the same during retirement, compared to only 35% of those who don’t use an advisor. We’ve seen this kind of finding ratified before: if an individual is working with an advisor, they have greater confidence in their financial future than those who don’t.

This may be because people who are in a better position to hire an advisor are also in better shape about their retirement (correlation). But the evidence we’ve seen strongly suggests that the relationship is causal: people feel better because they’ve engaged an advisor. Knowing where they stand, and being able to plan for it, often boosts their confidence and peace of mind.

2. People may be worrying about the wrong things

There are some significant gaps between an investor’s perception of risks and an advisor’s informed analysis of risks. For example, only 22% of investors worry about longevity risk while 53% of advisors bake it into their clients’ plans. Twenty-nine percent of advisors consider the cost of long-term care, while only 21% of investors are concerned about it.

Conversely, investors are almost three times more worried about health insurance premiums than advisors think they should be. And they’re about a third more concerned about market and interest-rate volatility risk than advisors are.

3. DIY investors, overwhelmingly, would consider hiring an advisor

A whopping 82% of investors who consider themselves DIY would nonetheless seek the advice of an advisor for financial planning. The principal motivator is the need for a retirement plan followed closely by the need for ongoing investment advice and guidance, developing a financial plan, trust and estate guidance and help in transitioning to retirement.

Based on the survey, DIY investors overall are unprepared for retirement in terms of planning, knowledge of maximizing Social Security benefits and tax-efficient withdrawal strategies.

The demographics, and psychographics, are in advisors’ favor. The more you can present your capabilities as a holistic solution to “life risks,” while demonstrating specific expertise in detailed areas of planning, the greater the likelihood of continued success.

Source: The Planning Gap, Expectations vs. reality: What investors think – and how advisers plan – for retirement income, © 2017 Nationwide

It’s WOTY Time!

“The trouble with words is that you never know whose mouth they’ve been in.”  – Dennis Potter, playwright

If you’re a word person, then this truly is the most wonderful time of the year. Why, you might ask? Because it’s time for the various and sundry word authorities (i.e., dictionaries and the American Dialect Society (ADS) – yes, there really is such an organization) to declare their official word of the year (WOTY for those who follow such things). The timing, as well as the pomp and circumstance surrounding these proclamations, vary. While most publish their words in the end of the calendar year to which they apply, ADS is one of the only to issue its WOTY in the following calendar year, so we’ll have to wait until 2018 to see what its word is. The ADS is also proud to stake the claim for the longest tenure of issuing English words of the year, dating back to 1990.

Sign of the times

Not surprisingly, the words of the year tend to reflect what is/was on people’s minds at the time. Let’s avoid most (it’s impossible to avoid them all) of the more politically focused WOTYs and explore a sprinkling of WOTYs throughout the years from ADS:

If you have a word you’d like to nominate for 2017, suggestions are open to all at

The first WOTYs of the year

Like the first robin in spring, the first WOTYs have recently been sighted. In the U.S., has declared its word of the year to be “complicit,” defined as “choosing to be involved in an illegal or questionable act, especially with others; having partnership or involvement in wrongdoing.” Across the pond, Collins, which is both a UK printed and an online dictionary declared its WOTY to be “fake news,” defined by Collins to mean “false, often sensational, information disseminated under the guise of news reporting.” While it remains to be seen what other major publishers of WOTY (Oxford and Merriam-Webster) designate as their top words for 2017, neither words already published evoke a particularly positive mood.

Not just any word can be WOTY

The path to word of the year is not easy. According to Oxford Dictionaries, “Every year, candidates for Word of the Year are debated and one is eventually chosen that is judged to reflect the ethos, mood, or preoccupations of that particular year and to have lasting potential as a word of cultural significance.” For most issuers of a WOTY, an increase or spike in usage during the year in response to events is typical.

Collins describes their approach “by monitoring word output across all forms of media and (by consulting their 4.5 billion word database) as having most grown in visibility over the past year, reflected social and cultural developments, and gained traction for reasons both good and bad.” According to Collins, “fake news” saw a usage increase of 365% since 2016.

Never underestimate the power of the word

Words, like images, are powerful and can provide a record of the feelings and events of a time. Even seemingly innocent, neutral words can evoke (and provoke) strong emotions and reactions depending on how they are used and in what context.

Bitcoin: A Teaching Moment

Whether a wealth advisor sees Bitcoin as an attractive investment opportunity or as more of a speculative investment, the dramatic rise in the distinctive currency’s price this year can offer a valuable teaching moment on an advisor’s core investment beliefs.

For advisors who are long-term, value investors, the Bitcoin phenomenon appears to be a speculative bubble. As a crypto-currency, existing in cyberspace, it could be argued, as Jack Bogle recently did, that Bitcoin has no intrinsic value at all. For those who believe this, underlying fundamentals to turn to in setting a price are lacking, leaving no basis to predict future value. The price spike is based on perception, and, therefore, a change in perception could cause the bubble to burst. Such advisors believe that holdings like Bitcoin have no place in a soundly managed investment portfolio.

On the other hand, advisors more favorably disposed to Bitcoin may underscore its potential role as an “alternative” investment appropriate for a non-correlated, but possibly more speculative allocation, in a diversified portfolio. These advisors may reinforce the view that all value is fundamentally based on perception and feel that growth opportunities in particular may be missed if too much weight is placed on “fundamental” value.

For either side, the nature and characteristics of Bitcoin provides an opportunity to explain in the clearest of terms, their distinct approach to investing.

Think Digital, Act Human

In the new Digital Age, the word “digital” has almost become redundant. From how we get our news, plan our trips and make purchases, just about everything is digital. It’s become the standard and, for many, the expectation. As a recent study from Ernst and Young (EY) demonstrates, the wealth management industry is no exception. 

 Clients’ Primary Channel Preference

Source: The experience factor: the new growth engine in wealth management

What is striking is the pace at which that expectation is changing. The study, which queried more than 2,000 individual clients ranging from mass affluent to UHNW, shows that, today, a third of these clients prefer to find an advisor through digital means, but in the next two or three years, that number will increase to 46%. Similarly:

1.Preference for opening accounts digitally will grow from 38% to 52%

2.About two-thirds of clients will prefer to learn about and buy products digitally in a few years, up from 58% today

3.And their preference for receiving advice and research digitally will rise to 60%

As you might expect, the trend is especially prevalent among younger clients, who represent the future success of wealth management practices. The study reveals that 43% of UHNW millennials surveyed globally would be “very likely” to consider opening an automated account. They’re also “very likely” to consolidate their assets into fewer firms – 51% of them versus only 9% of UHNW baby boomers.

But, according to the study, while UHNW millennials may have assets, their financial needs may not be sufficiently complex to demand the same range of services – like tax and estate planning and trusts – as those of UHNW boomers. And even if they did, the study points out that they’re concerned that digital advice is “too generic” and firms delivering it have limited track records. This reinforces our belief that established firms capable of delivering a truly personalized experience still occupy a strong position.

The takeaway is to stay current with solutions that meet clients’ digital expectations and thereby make their experience as frictionless as possible. As the EY study observes, “digital capabilities are at the top of wealth management clients’ must-haves.” But at the same time, this digital facility needs to be balanced with the distinctly human value-add of listening, empathizing and understanding the full range of client needs, as well as providing customization at some level, whether it’s by need, type of client or other criteria.