"The financial communications industry will need to evolve more quickly with changes to the media and investment landscape, as other segments of communications have,” said Michael Fox, Chief Client Officer at ICR.
This article is featured in O'Dwyer's May '17 PR Firm Rankings Magazine
Fox believes Millennials’ transition into a target audience for financial communicators will become a major source of impact for the industry in the coming years.
“Digital media is simultaneously expanding and fragmenting into many more outlets for information, presenting new challenges and opportunities for companies in the way they communicate to their current and potential stakeholders,” said Fox. “The way Millennials consume information and the things that influences their behavior are very different — and financial communicators will have to adapt.”
“One need only look at the recent challenges faced by United Airlines this past year to understand the true value of corporate brand reputation,” said Andy Merrill, Partner at New York-based financial firm Prosek Partners.
Merrill said that as the value of protecting brands and leveraging them to drive the business grows, so too will the demand for strategic financial communications services.
“As that demand grows, our clients are challenging us to open, develop and build new and innovative communications channels to deploy their corporate narrative, differentiate and promote their brand and, ultimately, support the continued growth of their business,” he said.
The impact of regulations
Meg Wildrick, Managing Partner at Bliss Integrated Communication, said that her firm has discovered that new regulations — being it in banking, tax, investing, reporting or fiduciary rules — actually create as many communications opportunities they do challenges.
“Like technological change, regulatory change spurs companies to seek out new business models, distribution channels and customer groups,” says Wildrick.
Wildrick said Bliss, whose clients consist of a mix of established players and disruptors, is seeing requests for an increasingly diverse array of services: everything from content to traditional media relations, to social media and lead generation.
The agency accounted for more than $3.9 million in finance-related net fees last year.
“Ten years ago, regulated companies were slow to implement social media and content marketing programs,” Wildrick said. “Today, it’s rare to find a financial services company that isn’t sharing content actively on owned and social channels.”
Digital, social communication essential
Mike Boccio, Executive Managing Director at RF | Binder Partners and Bill McBride, Senior Advisor, told O’Dwyer’s that an adoption of new technologies has led to a proliferation of content sharing and consumption across digital and social platforms, which presents both significant opportunities and challenges for the financial communications industry.
“Today, target audiences and constituencies including investors and shareholders are paradoxically as interconnected as ever, yet also highly fragmented — and they are becoming less reliant on traditional resources and modalities to inform their longer-term investment strategies, daily decision-making and overall perception of brands,” Boccio said. “As a consequence, communications campaigns must be always on, fully integrated across channels and measurable to enhance efficacy.”
Richard Dukas, Chairman and CEO of Dukas Linden Public Relations, said he’s witnessed a massive reallocation of assets from active investors, everything from mutual funds to passive index funds like the SPDR 500, an ETF that closely tracks the S&P 500 index.
As baby boomers begin reaching retirement age, Dukas said we’ll simultaneously begin to witness the largest generational transfer of wealth in our country’s history.
In a low interest rate environment, cheaper index funds will tend to outperform active managers. Markets don’t go up forever, but active managers will need to work harder to convince the investing public of the value they offer despite their steeper costs, and alternative managers will need to do a better job communicating the true value these funds provide to a skeptical public and media.
“Hedge funds and other alternative asset classes have generally under-performed compared to plain, ‘vanilla’ index funds, such as the SPDR 500,” Dukas said. “These index funds and ETFs are far less expensive than hedge funds, private equity and other alternative asset classes. Now more than ever, mutual fund companies and active managers need to communicate the value they offer investors, especially over the longer term.”
“Boomers and larger institutional investors, such as pension and endowment funds, as a general rule, aren’t comfortable receiving information about investing from social media,” Dukas continued. “However, the industry will need to grapple with the challenge of how to communicate to a more tech-savvy Millennial and GenY demographic, which is more comfortable with social media.”