Spaghetti Sauce, Content Marketing and the Future of Financial Advice

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Since the dawn of the financial advice industry, financial professionals have created value propositions centered on the intangible qualities they provide investors. The focus on these qualities—including face-to-face interactions, the promise of a genuine personal relationship and emotional support—has only grown stronger as the robo-advisor revolution has gathered steam.

The industry has pegged these qualities as key differentiators between human financial professionals from machines. Data from Charles Schwab, however, offers a potential challenge to this line of thinking.

The study found that investors in the Millennial and Gen X generations were not only less willing to pay for professional service from advisors (only 44 and 47 percent respectively), but they were also less likely to want to discuss investing strategies with a professional (49 and 48 percent) than their Baby Boomer counterparts (55%). Although it’s not necessarily a surprise that Millennial and Gen X investors are more likely to prefer to automate investing decisions (51 and 52 percent), it is interesting that 39 percent of Baby Boomers and 33 percent of Matures listed automation as their preference.

Regardless of how you choose to read the results, it would be difficult to disagree that the advent of powerful technology in the advisory space has introduced at least a question in investors’ minds as to how they should be managing their money. The solution is certainly far more complicated than a simple “man vs. machine” scenario, but may require a few steps outside the box. I believe the “why” behind these results has less to do with the actual value of a financial professional’s services and everything to do with spaghetti sauce.

Human Financial Professionals and the “Extra Chunky” Phenomenon

I love a good TED Talk. One of my favorites comes from Malcom Gladwell—“Choice, Happiness and Spaghetti Sauce.” In this talk Gladwell tells the story of Howard Moskowitz, whose revolutionary approach to buyer behavior and happiness brought the world “extra chunky” spaghetti sauce.

Moskowitz was a consultant in the 1970s when the prevailing marketing mantra was to “give your customers whatever they say they want.” In working with a wide range of companies, Moskowitz found that, while human beings will certainly tell someone what they like, their “wants” can only exist in the frame of reference of products already available. In other words, we may want or need something that doesn’t yet exist.

Moskowitz was eventually hired by Campbell’s Soup, makers of Prego spaghetti sauce. Prego, and its primary product, a “traditional” tomato sauce, was struggling mightily against competitor Ragu. Using his theory, instead of trying to perfect the original recipe by asking what people did and didn’t like about Prego, Moskowitz created 77 completely different kinds of spaghetti sauce and asked people to test each one.

While the diversity of the responses was incredible, Moskowitz found that people could be filtered into three categories: plain, spicy and extra chunky. The biggest shocker in the results was the number of people who chose the types of sauce that could be placed in the “extra chunky” category. This finding was shocking because, at the time of the study, there was no such thing as “extra chunky” spaghetti sauce, lending credence to Moskowitz’s hypothesis.

I think there are similarities between the original approach to spaghetti sauce and the way today’s investors view the value of human financial professionals. Just over half of the respondents to the Jackson study had ever met in person with a human financial professional. The value of these intangibles relies completely on a personal relationship, yet respondents hadn’t ever had the opportunity to interact with a human financial planner.

From this perspective, the reason many investors view these services as an unnecessary expenditure is likely because they’ve either been successful without the support in the past or they are simply afraid of paying a substantial amount of money for an unknown. In other words, they’re just fine with the traditional spaghetti sauce because they haven’t been exposed to the “extra chunky.”

You’ll recall that at one time we didn’t see a need for the telephone, the Internet, personal desktop computers, or smartphones—until we saw what the products could do. Moskowitz showed us that human beings don’t know what we really want or like until the product or service becomes available.

Consumers’ lack of understanding is often coupled with a fear of the unknown, which is generally bolstered by sensationalistic media content. Thus, human financial professionals are at a disadvantage in proving their value before they ever get a prospective client in the door. So what do we do?

Proactive Education Through Targeted Content Marketing

A successful relationship between a human financial professional and an investor is founded on implicit trust. To prove their value to investors, financial planners must first work to build a solid level of trust with prospective investors—which is easier said than done.

Although trust in financial services has increased in the last few years, the 2017 Edelman Trust Barometer showed that the industry still held the lowest level of trust of all sectors. To make matters worse, coverage of the Department of Labor fiduciary conversation from both sides of the aisle has further muddied the waters for consumers.

However, there’s opportunity here. Trust is something we can work together to rebuild and content can be an important part of the solution. To use banks as an example, a study from NewsCred revealed that, while one-third of those surveyed don’t trust their own bank, half of those respondents said they trust the bank more when they offer helpful content. Another 50 percent of respondents say that offering helpful, useful content delays their desire to switch banks. Thus, it’s clear that a certain type of investor looks at content as a factor in decision-making and trust when it comes to their financial services relationships.

But what about the other side of the coin? A survey from marketing agency Kapost showed 76 percent of financial services professionals also believe content marketing is the best way to regain trust. In my opinion, there are three main reasons why content may be able to assist financial planners in both building trust with prospective clients and representing their value propositions in a difficult climate.

  • The Importance of Common Ground. When attempting to address a discrepancy, it helps to find common ground. In the financial services industry, it can be difficult to find consensus, regardless of which group is being surveyed. Financial services providers, planners and investors are categorized quite broadly, but the individuals within these groups are extremely diverse. In the case of content, based on the above statistics, investors and financial services professionals mercifully agree. Usually, when you find this type of consensus, it can pay to act on it
  • The Correlation Between Trust and Relevant, Useful Content. Educational, product-agnostic content inherently allows marketers to build trust. Unlike advertising, where too much volume or overly aggressive messaging can hurt a brand or business, content allows us to demonstrate our intent, expertise and value one piece at a time, constructing a consistent, case for trust over the long term. If your content is truly engaging and relevant to prospective investors, you’ll be doing more than just building trust; you may be delivering that “extra chunky” recipe investors have been waiting for.
  • The Value of Targeting Different Groups With Specific Messages. Content allows planners to target very specific messages to different types of clients. As Gladwell mentions in his TED Talk, Moskowitz’s novel approach to spaghetti sauce, and behavior in general, wasn’t an attempt to find the perfect spaghetti sauce, but to find the perfect spaghetti sauces. In other words, he showed that brands should embrace the variability of their target client groups, as striving for universality casts far too wide a net.

Moskowitz chose to place the spaghetti sauce tasters into distinct groups (plain, spicy and extra chunky). This is a valuable point for planners in terms of segmenting content for prospective clients. While a financial professional can’t be everything to everyone, it’s important to attempt to place prospective investors into a few select categories and to tailor content for each specific audience. One way to do this is to review your existing client base and choose your top 10 clients based on the attributes you look for in an ideal client. From there, choose the attributes that you find most important in the planner-client relationship and use them to separate clients into different categories. If you end up with too many similar clients, try starting over with a larger sample size.

In Summary

If a financial planner can just get investors in the door for a meeting, then they’ll see the light and the problem will be solved, right? Of course not. I’m certainly not saying that content is the magic bullet to eliminate the mistrust and fear of the unknown that make today’s investors hesitate before considering a relationship with a human financial professional. But do I think that providing relevant, valuable and free content to prospective clients can help planners begin to chip away at these issues? Absolutely.

The data surrounding the unwillingness to pay for intangibles such as emotional support, face-to-face interaction and an authentic relationship should serve as a catalyst for planners to learn how to articulate their value to existing and prospective clients. And I firmly believe that content marketing can be a highly effective tool to help planners do that.

This is a piece of a whole effort—including asking for referrals from current clients, getting yourself out there in the local community by attending events and sponsoring charity work—to help investors get to know “the real you.” Because it really comes down to authenticity. If prospective clients can sense your sincerity, you’ve already overcome the most important hurdle. Expertise, knowledge and skill are all implied, but trust must be earned.

Dan_Martin_Headshot
Dan Martin is the Director of Marketing for the Financial Planning Association, the principal professional organization for CERTIFIED FINANCIAL PLANNERTM (CFP®) professionals, educators, financial services professionals and students who seek advancement in a growing, dynamic profession. You can follow Dan on Twitter at @DanW_Martin

 

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