Each year, online broker executives look forward to the Investment Trends annual global survey for lessons learned across the globe about the online investing business and client experience. At the 2016 Online Broker Summit, the Investment Trends CEO, Michael Blomfield, presented survey findings and his firm’s interpretation of the retail investing landscape.
The overarching mood from the survey, according to Mr. Blomfield, is that investors around the world have serious concerns right now. They’re worried about domestic economies, the U.S. economy and high debt levels. Because of this, they’ve become frozen with fear. They’re holdings positions too long or staying out of the market too long, and this relates to both investors and brokers.
To fix this, brokers need a proper understanding current investor needs and concerns.
“When we ask people where they go for help, the first thing they tell us is Google,” Blomfield noted. This isn’t good, since each of these investors has a broker or wealth manager. But it seems investors aren’t getting what they need from their brokers.
What is it investors need? Blomfield has asked that question, too, and the answer is invariably that they need someone to tell them what to do in this environment of uncertainty. Blomfield stressed that investors don’t say they want more education or more research. They want specific trading ideas and strategies, and brokers who can connect with investors and provide those things will see their client satisfaction levels improve.
Two growing trends highlight investor fear of not knowing what to do:
Sometimes we, as an industry, make the mistake of thinking that personalization equals the timely delivery of generic information. Investors want trading ideas, but they want it contextually. - Michael Blomfield
Generally, brokers aren’t looking at an investor‘s portfolio in real-time, while the investor is looking at alternatives and trying to decide what to do next. This means brokers aren’t there to say, “If you did the following, the risk profile of your portfolio would change in the following ways.” As a result, investors are looking at their portfolios, they’re reaching the buy screen and then getting stuck at the execute button. This is where brokers can help by suggesting specific and personalized investment ideas and strategies.
Blomfield reiterated that it’s not an unwillingness to invest that’s holding investors back. It’s an inability to find that one thing they want to buy. Brokers must try to put that one thing in front of investors. “Stop being brokers and start being solution providers,” he said.
The level of client satisfaction is low across the globe. Regardless of what innovations, your company has achieved in the past year, when Mr. Blomfield surveyed clients on what their broker has done- 60-70% said “Nothing”.
Blomfield presented a case study of a client who achieved the first place position in satisfaction within the industry. How did they do it?
While online brokers offer a range of investment research tools and education to their clients, we can learn something from the rise of robo-advisors and thematic portfolio brokers such as Motif Investing. Investors are looking for the next level of decision support beyond access to information and education, which is "prescriptive" support. This demand is elevated during times of heightened anxiety as investors are uncertain how to proceed and sit on cash instead. Brokers are discovering they can re-engage clients as they initiate a dialog that proactively addresses what's on the minds of investors. This often starts with soft marketing around topics of interest in the news to demonstrate empathy. And now Trading Central is helping online brokers make that dialog actionable. Find out how our clients are using our Strategy Builder product to deliver relevant thematic portfolios as a "way forward" for investors while maintaining their decision autonomy which is necessary in our space.