When Words Get in the Way of a Good Thing

By Josh Book

Financial jargon is preventing consumers from realizing the opportunities of low-cost digital wealth services.

Wealth management services have typically been promoted toward high-asset individuals while remaining opaque or inaccessible to the less wealthy. The advent of digital wealth platforms brought the promise of more accessible, lower-cost financial services for individuals of all asset levels, but so far these opportunities have not been realized by the majority of consumers because they simply don’t know enough about them.

According to new consumer research at ParameterInsights, of the digital non-users surveyed in Canada, nearly half did not invest because they didn’t “know enough.” In the US, the numbers were slightly lower, but still notable.

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This situation exists despite the tens of millions of dollars spent on marketing and advertising digital wealth services in 2017. So what is the problem?

Clients of traditional wealth managers may be familiar with terms like “diversified portfolio” and “passive investing,” and understand what low fees mean in the context of their annual advisory costs. However, the same can’t be said of the large segment of people historically underserved or not served at all by wealth management services.

According to our research, instead of communicating directly to this underserved population, digital advisory firms, both upstarts and incumbents alike, have largely saturated the market with feature-heavy and fee-oriented marketing messages. Such communications lack meaningful differentiation and have only served to make it more difficult to reach consumers who already feel disillusioned about their financial prospects ... even those who earn relatively higher wages.

As firms continue to replace traditional approaches with newer and more innovative digital offers, they must be relentless in helping consumers understand the significant opportunities now available--regardless of income levels or investable assets.

Our category and brand research has found that the few digital firms who are breaking through to consumers are those presenting their offers in uniquely engaging ways. For example, online investment firm Wealthsimple launched a documentary-style “Investing for Humans” marketing campaign in September 2017 and has since driven considerable awareness and affinity for the brand. Rather than focus on the product, the campaign featured individuals of all ages and backgrounds openly discussing their experiences with money. Acorns is another firm that has found success by demystifying the investment process, communicating their core business model of “paying yourself first” by investing “spare change.”

This insight doesn’t imply that marketing spend should be increased but rather that firms should pause to evaluate the types of messages they are developing and how they can deliver those messages. To engage the general public, offers must be articulated in unique and approachable terms to drive home the message that “wealth management” is not just for the ultra-wealthy or highly educated. Saving and investing can be simple and painless, and digital wealth platforms should be making the process easier for everyone. Opportunity still abounds.

To learn more about our data and research into the digital wealth management category, please start a conversation with us.