Financial Services Firms’ Missed Opportunity

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Here’s the problem I have with all the hype about social media in the financial services industry: For all the talk about “joining the conversation,” few social media evangelists really get specific about helping financial services firms understand what to say in those conversations.

I think this is an issue, and here’s why: Based on research I’ve recently published, I don’t think that financial services firms are having effective conversations with their customers in any of the channels they interact with them in.

Aite Group surveyed 500 consumers — half of whom plan to retire in five years, the other half who retired in the past five years — and asked them what financial products were in their portfolio, and if they thought that those products are playing the appropriate role in their retirement portfolio.

Among mass affluent and high-net-worth investors, 99.5% identified at least one financial product that they believed should play either a larger or smaller role in their portfolio. Roughly four out of 10 investors who hold mutual funds, CDs or stocks believe each of these instruments should play a larger role in their portfolios.

And just because a product isn’t in an investor’s portfolio, it doesn’t mean that he or she thinks that it shouldn’t be. One in five investors without mutual funds think that they should have them, and one in four without CDs think that they should have CDs.

What this tells me is that although financial services marketers are adept at understanding the impact of life changes on the financial product needs of consumers, they don’t really know what’s on their customers’ minds.

Instead of asking what we asked — what do you have, what do you think should play a larger or smaller role in your portfolio, etc. — financial firms are asking about risk tolerance and desired (or expected) retirement lifestyles.

As a result, they’re missing opportunities to make product sales. Simply because they don’t ask the right questions in the conversations that they already have. I don’t see how engaging customers in online social networks is going to make those conversations any different.


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