Many advisors are telling investors “exactly the same thing” and failing to deliver a unique and engaging value proposition. There is also “a lot of jargon” in the wealth management sector, Pershing tells FWR.

Last month research by Pershing showed that many financial advisors are telling investors “exactly the same thing” and thus failing to deliver a unique and engaging value proposition.

The “web harvesting” study examined the text on 84 financial advisor websites belonging to firms on Barron’s Top 100 Independent Wealth Advisors list. It found that many value propositions focus on firm attributes rather than benefits to the client, making it difficult for prospects to distinguish between them.

And there is also “a lot of jargon” in the wealth management sector, which is a dis-service to investors, Kim Dellarocca, managing director at Pershing, told Family Wealth Report.

“They [investors] have a long memory with the financial crisis and still have issues around trust,” Dellarocca said.

But there remains an issue around how wealth managers can strike the right balance when it comes to communicating trust, integrity and accountability. While there is a danger that over-using related language may discourage investors, it is not common practice to ignore the matter entirely.

Similarly, Dellarocca agreed that over-simplified value propositions may discourage those individuals who fear they may be under-served due to a lack of customization. Pershing found that even though many advisor websites feature phrases such as “relieve the burden,” these propositions are rated as low in importance by most investors.

“'Simplicity' doesn't resonate as much with the majority of investors because they recognize they're going to have to take an active role in their finances,” Dellarocca said.

Of course, preferences will vary, Pershing's study found, according to specific investor demographics - one example being that younger investors with limited financial experience and ultra high net worth investors with more complex situations care more about ease and simplicity compared to older investors.

In the words of Pershing: “'Table stakes' promises are important to every investor. After that, however, different promises appeal to different market segments.”

Getting the message across

The issues raised in the study could be perceived as a sign of how awareness has grown in the wealth management sector about the role of marketing and how to stand out in what has become a crowded industry – particularly with all the next-gen hype.

But “what gets missed a lot is emotion,” Dellarocca said. “Facts and figures” are of course important, she said, but that isn't always enough to move people and tell a story.

“For clients who may be uneducated about our industry, one of the most compelling ways to talk about your firm and what our industry does is through a story or narrative. Use emotion to convey your values - can you be edgy and different without using overly complicated or flowery language? Can you standout by being real?,” Dellarocca said.

This point also echoes a flurry of research in recent months emphasizing the role of referrals in the wealth sector. Indeed, the industry has long been regarded as very much a “people's business,” with individuals sharing their experiences, learning from one another and ultimately recommending good advice and service (click here for a separate article on referral culture in wealth management).

Knowing your audience

In many cases, advisor websites are the first layer of potential interaction between a prospect and a firm – but “these messages aren't just value statements that live in one place,” she said.

When it comes to creating a value proposition, Dellarocca said it's important to be “really clear about who you're talking to.” One thought is to focus on niche client segments, such as sports and entertainment professionals, or entrepreneurs, to really showcase the specific benefits one particular firm can bring to one particular client.

Business value propositions must therefore be continuously re-visited, she said, particularly in view of the emergence of new communication channels, for example.

Indeed, online forms of engagement between wealth management firms and clients are no longer regarded as “nice-to-haves” but must-haves in such a sector where clients expect to be able to access information and discuss affairs 24/7. Likewise, for many prospective clients, the instant “feel” of an advisor's website and value proposition may prompt them to either continue looking elsewhere or proceed to learn more.