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

Race to the Bottom

Last month, Interactive Brokers Group, Inc., announced the October launch of IBKR Lite, a new offering that would provide commission-free trades on U.S. exchange-listed stocks and exchange traded funds (ETFs). Not to be outdone, three days later, Charles Schwab, the largest publicly traded online broker, followed suit similarly eliminating all commissions on online stock trades. Later the same day TD Ameritrade did the same. E*Trade and Fidelity quickly followed.  

These dramatic events are the latest in an accelerating race to the bottom for fees. The investing public has apparently reached the conclusion that the cost efficiencies of electronic asset management and trading are real, significant and should be passed on to the consumer. Indeed, the perception that many of these services are largely automated and virtually without cost has become widespread, fueling the demand that they should be an accommodation rather than a paid for service.

While these latest events do not impact wealth managers directly, they do help to underscore what the consumer views as value-added versus commodity services. In this regard, wealth managers may be well-advised to take the following steps:
○ Draw a clear line between the product/operational side of their offering and the custom designed, personal advisory side.

○ Ensure through clear and regular communications that clients understand the work involved in, and the value derived from, the advisory side.

○ Be transparent about pricing with reference to the two sides and how efforts are being made to minimize the cost of operational services and product production.

Reach Out and Write Someone

Client experience. Relationship building. Client-centric service—all standard in wealth management. You work hard every day, and sometimes into the night, to give your clients what they want and need. No doubt you communicate through email and possibly texting. These are great methods for client communication, but when was the last time you sent a handwritten note?

Our mailboxes (the real ones that stick out of the ground or are built into a wall) have become sad empty places, where we get coupons we will never use and direct mail we will likely not open. With so much electronic communication and lonely mailboxes (even bills come electronically for most of us) wouldn’t it be memorable to receive a beautiful envelope with a nice card that feels great to touch and a personal handwritten message? Your clients get the same boring mail as you do, so why not surprise them with a heartfelt note? 

Send one on special occasions or everyday occasions
Have a few clients who are business owners? Learn when they started their business and send them a note congratulating them on their longevity and success. Birthdays seem like a given, but what about a note saying, “Hi Judy, I know Evan started school this past month, I hope he is doing well, and you are slowly getting used to the quiet house!” After all, you may have been the one who helped Judy get Evan an education. End with “Let me know if I can help with anything.”

Keep it short and sweet
No need for an extensive missive using all four sides of a card. Get to the point quickly whether you are congratulating or thanking them.

Make it special
Nothing says how appreciated someone is like a handwritten note on really high-quality heavy paper with a matching envelope. Get something that fits your personality, classic or modern, plain or with artwork, as long as you feel special sending it, your client will feel special getting it. Handwriting the address on the envelope and putting a real stamp on it will elevate the experience. To really take it to the next level, you could even get high-end cards made with your company’s brand as well as personalized stamps.

Cybersecurity Tips

October is National Cybersecurity Awareness Month (NCSAM), an initiative spearheaded by the U.S. Department of Homeland Security and the National Cyber Security Alliance. The effort includes extensive media coverage and industry collaboration, which means your clients may be hearing a lot about this in the next few weeks. This year’s theme, Own IT. Secure IT. Protect IT. encourages individuals to be proactive about taking control of their digital security, which may lead to an increase in client inquiries about protecting their data.

Here are three tips to help reassure clients and keep their information safe:

Tip 1. Review your internal cybersecurity policies and procedures
25% of state registered investment advisors demonstrate deficiencies in cybersecurity1. And, according to FINRA, while broker-dealers have been strengthening their cybersecurity programs, there are still issues that need to be addressed. Both FINRA and the SEC offer resources for protecting financial organizations and their clients against data breaches. Preventative measures include:

1. Assessing potential risks, including a firm-wide inventory of assets and sensitive client data exposures

2. Developing written policies and protocols to protect data and detect dangers

3. Creating procedures to respond to threats and recover information

Tip #2. Educate your clients
70% of hacking attacks start with a phishing email2, many of which are from sophisticated cyber criminals purporting to be financial institutions. In a phishing attack, a scammer delivers a fake email directing individuals to update or confirm financial information in order to gain access to financial accounts, passwords and pins. FINRA reports that phishing attacks remain a top cybersecurity challenge and pose a serious threat to investors. To protect clients, make sure they know about your information sharing protocols. You can also provide tips for identifying phishing scams, for example, warn them not to click on links to financial accounts or respond to emails asking for confidential information. And remind them to request their credit report each year, to check for fraudulent transactions and accounts they did not open.

Tip 3. Provide reassurance 41% of investors say they are concerned about cybersecurity as a threat to company growth prospects3, which means that, in addition to privacy concerns, many investors worry about how the risk of a cyberattack might affect their investments. If this is an issue on your clients’ minds, you can discuss the steps you are taking to keep their data safe.


1 2019 Investment Adviser Coordinated Examinations Report, North American Securities Administrators Association, Information pulled September 30, 2019,

Internet Security Threat Report, Symantec, 2014 and February 2019,

3 Anxious optimism in a complex world, 2018 Global Investor Survey, pwc,

Afterpay: The Modern Installment Loan

Another trend toward the digitalization of financial services can be found by what is known as “buy-now, pay-later” firms, the most well-known of which is Australian fintech company Afterpay. This model competing with traditional bank and credit card “lending” allows consumers to pay over time, without revolving debt, interest payments or other fees. Average outstanding balances on Afterpay is typically much smaller than on a credit card, about $218 versus $3,260 for credit cards.

Rapid Growth

Founded in 2014, the company went public just two years later. It now has 4.6 million active customers, with an on-boarding rate of 12,500 new customers daily. The company entered the U.S. market in the first half of 2018, and its annual report said growth in the U.S. (and the UK) was “exceeding expectations and major new merchants continue to onboard.” Annual U.S. sales were close to $1 billion in its first year of operations, with an expected run rate exceeding $1.7 billion, representing an already substantial percentage of overall sales

According to Afterpay, its primary target markets are millennials and Gen Z, which are “driving change in global spending habits which is meaningful today and will be even more meaningful in 10 years.” And that “Afterpay is uniquely positioned to benefit from this shift.” 

More and more retailers have partnered with Afterpay, particularly fashion and beauty companies, including Amazon, Lululemon, Sephora, Forever 21, Free People, just to name a few, all with strong brand appeal for the millennial and Gen Z consumer. Major card companies are entering the buy-now, pay-later arena, and Afterpay has partnered with VISA to provide its services to VISA card holders (up to a set dollar cap).  

Buyer Beware?

While companies such as Afterpay are revolutionizing the consumer debt space, there are some caveats. Although there are no fees as long as you pay on time, if you are late or miss a payment there are late fees, according to an algorithm which ensures that late fees are “never more” than 25% of your purchase or $68, whichever is less. There is no credit check necessary to apply for Afterpay, leading to questions whether the company is facilitating debt for individuals who may not “qualify.” In addition, missing payments can affect your credit score if Afterpay chooses to report your missed payments to credit scoring agencies, which it reserves the right to do, if you read the fine print. 

Despite these concerns, it appears that Afterpay, and other firms offering these services, are permanently disrupting the consumer lending horizon as we know it.

Passive Finally on Top

As expected, passive U.S. equity funds this past month officially surpassed active U.S. equity funds in assets under management. By the end of August, passive U.S. funds had total net assets of $4.27 trillion, compared with $4.25 trillion in active U.S. equity funds, according to data provided by Morningstar.

At the end of the day, performance has driven investors to choose passive funds over active. The performance deficit of active managers, which has been exacerbated by the prolonged bull market, is outlined in Morningstar’s latest release of its Active/Passive Barometer. This measures the percentage of actively managed mutual funds by asset class that outperform available passively managed index products in the same asset class over various periods of time. 

As the table above clearly shows, the odds that an active manager will beat the indexers is pretty low particularly in more efficient market categories. Only in mid- and small-cap growth funds, and only in the last five years, do the odds start to favor active. Costs are an important factor. Selecting a higher cost fund, even in small growth, significantly lowers the chance of outperformance.

These figures contain data from all funds that are classified as actively managed and does not consider active share. However, it is unlikely percentages above will shift in the near term to the degree necessary to convince investors to reconsider active.

Orange is the New Brand

If you ask someone in your office or on the street what some of the strongest brands are, you will probably hear names like Apple, Starbucks, McDonald’s and Nike. While these brands are well-recognized and respected, there are many others that provide a brand experience worth mentioning. One such company is Public Storage. From a branding perspective, Public Storage is doing an excellent job and here’s why: 

Consistency. The company uses its brand assets consistently and extensively. The logo and primary brand color are orange, it’s used on buildings, products and the doors to all the storage units. This visual cue allows consumers to quickly recognize the brand.

Customer experience. When you walk into a Public Storage facility everything is clean and orange and all products are displayed neatly. The person behind the counter is wearing something orange. The experience is somewhat hi-tech for a storage facility, with electronic forms, and systems that tell the staff exactly what they need to know in order to answer your questions.

Online experience. The website is completely on brand and user friendly. You can find a unit in the size and location you want. The website shares customer ratings on all locations and provides a picture of the facilities. Orange calls to action throughout the website allow the visitor to easily understand what to do next. There is also plenty of information on what fits into the different size units, how to pack and well-done fun videos that provide tips regarding your storage unit. You can also reserve and pay for your unit online.

There are many other factors that go into an easily recognizable brand (other than orange); everything has to work together whether you’re selling storage units or wealth management. A consistent look and feel along with an on-brand customer experience will deliver the brand awareness your company needs.

Getting the Word Out to Millennials

The most effective “advertising” is word of mouth. It comes from a reliable, often trusted, source, and it’s free. Millennials are no exception to this rule. Like preceding generations, they’re most likely to heed a trusted source. However, word of mouth has evolved to the words, pictures, videos, etc. of social platforms. 

Here are some ways advisors can reach millennials in the digital age. 

Be seen. Videos have never been easier to make, and millennials can’t get enough of them. YouTube has become a near-limitless repository of instructions and how-to. Come up with a list of discrete topics, set up a YouTube channel (easier than you might think), and speak to each for about a minute or two in your own voice.

Get on the platforms. When people Google search your name, you can elevate your presence by being on social media platforms such as LinkedIn, Twitter and Instagram. But make sure your headline and summary – call it your value proposition – is as captivating as it is informative. Then use social media regularly to spread your word. Post your thoughts and the videos you’ve been producing, share other content, and even publish articles.

Communicate regularly. During market volatility, one of the most valuable services an advisor can render is to acknowledge what’s going on and demonstrate that you are responding to the situation. Depending on your organization’s compliance procedures, reach out by email or text. The smart phone is an appendage of any millennial, so you can be sure they’ll receive it almost in real time.