Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Funds management marketing set to change with new wave of generative AI tech
Like every area of human activity, investment-fund marketing is grappling with the impact of generative AI – and in a setting where the entire funds management world is changing at pace. The only thing of which marketers can be certain is the fact that their world will be very different down the track.
In an environment where the customer experience that funds deliver may not be defined mostly by returns – where increasingly, customers are looking for ‘stories’ that resonate with them, in terms of thematics, impact and sustainability – the task of standing-out from the crowd gets harder.
While the industry banks on the fact that Australia has one of the largest and fastest-growing funds management industries in the world, underpinned by superannuation, the paradox is that it is a distribution-heavy, marketing-saturated industry in which all players are struggling to differentiate themselves, says Michael Kollo, chief executive of generative AI-focused consultancy Evolved Reasoning, who will present at The Inside Network’s CEO and Heads of Marketing Forum in June, on Victoria’s Mornington Peninsula.
“If returns are your main marketing tool, then you can expect to be in outflow roughly 45 per cent of the time. If your star stock-pickers are your main marketing tool, that’s not sustainable; it’s effectively gone. Everyone’s got the same mousetrap – as in everyone has a value fund, a growth fund, an Australian equity small-cap fund, or whatever space you’re in, and the investment processes don’t look all that different,” says Kollo.
If brand recognition is your main marketing tool, he adds, “good luck competing with the bigger pockets, who can be on more bus stops than you. And if ‘thought leadership’ is your main marketing tool, generative AI tools such as Chat GPT can flood the market with high-quality thought leadership pieces.”
So, what does a fund do to market itself effectively?
No-one has the answer yet, says Kollo, because what constitutes a great client experience will be very different for individuals. “It’s going to come down to, what does the consumer feel is the most important outcome from their individual experience with a fund? Is it returns, or is it sustainability, is it impact? Everyone has a different ‘story,’ that resonates most strongly with them.”
Where generative AI tools may take the market will be a fascinating tale as it unfolds, says Kollo; but what is already apparent is that the industry “won’t stay the same”.
Kollo sees a future in which generative AI turbocharges innovation, design and speed-to-market, for funds. “Rather than having a discrete set of funds that you’re marketing over and over again, managers will likely be able maintain a lot more funds, but also, bring them to life much more quickly, and retire them much quickly. It is probably going to be a more individualised market, with funds and advisers moulding thematic funds around people’s needs and wants, going to market and executing very quickly.”
Whatever the future, the industry is going to have to think very differently, Kollo adds. “It could be that the ‘Fund Store’ will be like the App Store, and people will download the fund for a week, play with it, and only keep it if they like it.”
