Robo-Advisors: It’s all about people

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Krysten Merriman, Marketing Director at ModernAdvisor

Investors today want to find a safe place to learn about investing where they feel comfortable enough to ask questions. Can FinTech and Robo-Advisors be the answer? I had the opportunity to speak with Krysten Merriman, head of marketing for Canadian Robo-Advisor ModernAdvisor, to get her take on how to connect with people through the right marketing channels and technology.  Here’s what she had to say:
Tell me a little about your history in the industry, what drew you in.
I actually stumbled into the industry by chance. In 2004, I was referred to a job as an advisor’s assistant. I couldn’t say I’d ever had an interest in finance before then. But one of the surprising things about working in finance is…it’s not all about finance.

Even in the robo-advisor niche, it’s like any other business. It’s all about people: finding ways to connect with, inform, and engage people.

How does ModernAdvisor differentiate in the robo-advisor market?
We are hyperfocused on providing the best automated investment service in Canada. We’re not associated with any fund companies, and we don’t sell any of our own proprietary products. We build the best portfolios we can out of low-cost ETFs. That’s it. Some of our competitors have broadened their scope to include insurance and other services, whereas investing is all we do, all day long.
At ModernAdvisor, we also seek to educate clients who want to learn more about investing. There’s a sense (and some robo-advisors encourage the idea) that robo-advisors give you the freedom to not have to think about your investments. And while that is true, we like to think that we’re helping our clients become better investors, too. We’re not threatened by investors empowering themselves with information; in fact, the opposite is true. We certainly don’t discourage anyone from going DIY, but we understand that even people who want to manage their own investments directly don’t have the time or patience to do so, which is where our service comes in.
For reference, here’s a really good piece on the growing robo market in Canada, by personal finance expert and columnist Rob Carrick.
Is there a conflict between trying to innovate and still staying faithful to the brand?
As a marketer, fintech is a great place to be. People almost expect your brand to have a bit of edge to it. You’re the underdog, so you can take some creative risks. Obviously you have to stay within the bounds of compliance, but you can write a sassy tweet, or voice a strong opinion in a blog post that would never get approved by Corporate Communications at a traditional financial firm.
We also have the ability to test out new ideas and iterate really quickly. I’ve worked with firms where it’s impossible to use a colour outside the corporate palette. The ModernAdvisor brand is evolving with us as we grow.
What channel is best for content marketing? Website, social media, or print?
As you know, today’s consumer (and investor) can smell a sales pitch a mile away. Great content provides value and allows you to earn the opportunity to talk to your audience. I’d say our most successful content initiatives have been collaborations with authoritative influencers in the space, particularly bloggers. The financial blogger community in Canada is fantastic – intelligent, opinionated, and principled. It’s especially inspiring to see people who’ve documented their personal struggles with debt and other financial challenges, transform into savvy, confident investors. Here’s a recent post we did listing some of our favourites. We absolutely respect their creative autonomy, and the level of trust they’ve built with their readers, so we’re honoured when we extend special offers that they deem worthy of sharing with their readership.
Where do you normally end up doing your reading?
I read Fortune’s Term Sheet every day, which Dan Primack wrote for several years before leaving recently (it’s now managed by Erin Griffith). He left to help launch a new media venture, so it’ll be interesting to see how he lends his voice to this next project. I also love Abnormal Returns and CB Insights. I used to subscribe to the hard copy of The Economist but I ended up feeling bad about all those dead trees.
What tech do you use on a day to day basis?
I’m an unapologetic Apple fan. I tried switching to Android phone earlier this year but switched back to my iPhone after two months. There’s just something about the user experience that’s superior, in my opinion.
What do investors like to read most? Do they show a preference for video, text or sound?
We’ve experimented with different formats, but text still seems to be the preferred choice. And there’s a fair bit of research out there that Millennials actually prefer to read than watch video. Millennials aren’t our only audience, but they’re a lot of the early adopters. When we do create video, we provide edited transcripts for those who prefer reading over watching, as well as the original slides for visual learners who don’t necessarily want audio. We’ve never done straight audio without a visual component.
Some people genuinely like to learn about investing, but for a lot of people it’s a chore. People will seek out information as they need it. So it’s better to give the right information at the right time in the right context. For example, we’ve got live chat so that investors can ask specific questions and get instant answers. And of course we try to answer questions in the way that people ask them, and optimize our content as much as possible for search.
What success and efficiency metrics do you prefer to use?
Because our product is abstract, success for us is judged by the ease with which potential clients go from being aware of us to becoming a client.
Right now, we’re mostly focused on signup completion. So the percentage of people who go through each signup step. We watch for places where people are dropping off, and find ways to simplify and improve the experience. There are lots of reasons why someone might stop short of signing up – design that isn’t intuitive, forms that are overwhelming, that kind of thing. The beauty of technology these days is being able to see exactly which parts of our flow are causing friction, and make changes accordingly. A/B testing our email campaigns and landing pages helps us make decisions.
What are your views on traditional fund fact sheets – crying out for disruption or still an essential tool for investors?
That’s actually a hot topic in the financial industry in Canada right now. Until now, the fund fact sheet has been the investment industry’s disclosure tool. Client statements often included an account balance and not much else. Because of that, most investors would be hard pressed to tell you exactly how well their portfolio has performed, especially those who make regular deposits throughout the year.
New legislation called CRM2 (Client Relationship Model – 2) is rolling out and will soon be impacting individual investors. While Fund Facts are still required, investors’ statements will now include more detailed performance information and an actual dollar figure representing the amount paid in fees throughout the reporting period. It’s not perfect, but we’re excited to see the industry heading in the direction of greater transparency.
I asked our Chief Compliance Officer what single thing he would change about fund fact sheets, and he said “put the fees at the front!” And rightly so. Fees are important! Morningstar says they’re the most reliable indicator of investment performance the average investor has got. Canadian investors haven’t yet embraced lower-cost products like ETFs to the degree that American investors have: the vast majority of retirement savings are currently in mutual funds. But we expect that to change as people become more aware of the fees they are paying.
I see you co-authored the e-Book “Women & Money.” Where did the inspiration come for this book and what’s the key take away you’d like women to get out of it?
It actually started out as a blog post for International Women’s Day. But once I started writing, it quickly evolved into something much bigger. And when I spoke to Julia and Sandi, they each had a lot to say about their experiences working with women as financial planners.
What I’d love for women to get out of it, is the idea that as women, we are responsible for our own financial well-being. I heard somewhere: “a man is not a financial plan.” It sounds silly, but there are so many women who defer making important decisions, hoping or expecting that their current or future spouse will look after it.
I’m not saying that women shouldn’t be stay-at-home parents, but they absolutely need to know how their household finances are being managed.
How do you see robo-advisors working with traditional advisors?
Right now, advisors and their staff spend a bunch of time on administrative functions that have little to do with actually providing advice. Technology within the industry progresses at a glacial pace. I see robo-advisors and other fintech firms bringing some much-needed efficiency and user experience improvements – two areas where traditional firms tend to struggle. And with the fiduciary rule in the US, I think advisors will begin referring to robos clients they can’t adequately serve to the new standard.
What does the future “advisor” look like? Computer or human?
Cyborg. I’m only kind of joking. I think the really great human advisors will always have a job. These are the advisors who put their clients’ needs first and are transparent about their compensation.
In the US, the DOL’s fiduciary rule is already starting to impact the industry. Here in Canada, robo-advisors are technically considered portfolio managers, which means that we’re held to a fiduciary standard. But the term ‘financial advisor’ means nothing – pretty much anyone, including bank tellers and sales reps, can call themselves an advisor. It’s the same in the States – I’m sure you saw John Oliver’s segment on Last Week Tonight, which was just brilliant.
Canada’s mutual fund SRO, the MFDA, is campaigning to have the title restricted to people who have at least one of six common designations. Until that happens, investors can look at an advisor’s credentials – designations like the CFA and CFP – that are generally well-regarded, as an indication of quality.
Thank you Krysten.
Follow Krysten on Twitter.

courtney mcquade

courtney mcquade