A recent report by Dalbar (a well-respected research firm in the financial services industry), which ranked the websites of top mutual fund companies, has some interesting implications for the entire industry. (I believe that the findings are germane to all segments of the industry – sponsor firms, investment managers, RIAs, etc. So take notice!)

Let’s start with the overall conclusion – it’s critical that websites are easy to navigate and that content is easy to find. In addition, continuity among the different features being offered is important; for example, the use of social media should complement the functionality of the website and fit naturally.

Poor functionality will lead to frustration on the part of the user and any value-added contained in additional content will be lost. An effective website must have good design (which includes the look as well as the functionality) as well as good content. One without the other is not enough. To quote an executive at a large fund family, “It’s all about getting the right content to the right person at the right time.”

In designing your website, make sure that you dedicate the necessary resources to both design and content!

There were a few other interesting findings in the report as well. The use of mobile, social media and interactive features is increasing. Again, while this is not surprising, it’s important to reiterate that the most effective sites allow clients as well as prospects to utilize the information and access the resources of the company the way that they want to – it’s all about the user! Make it user-friendly!

Finally, the “viral” component – the ability for readers to share the information with others – is growing significantly (the phenomenon is called social sharing.) People want to share content that they find useful, especially when it comes to their finances, and making it easy for them to do so helps spread your brand further – and faster!

Needless to say, I am a believer in the important role that social media has in helping to build a financial services business; it has helped me in my practice tremendously. I reviewed the best book that I have read on the topic – The Digital Handshake by Paul Chaney – in this blog on March 13th. I still think you should read the book for a great overview of the many social media outlets that are available and how they might be relevant to your particular business.

For those that are ready to jump in though, I wanted to introduce an exciting new online resource called Jarupa. Jarupa offers online courses in learning WordPress, Email Marketing, Social Media, Search Engine Optimization and much more. Click here to learn more about Jarupa. Now – for purposes of full disclosure – Jarupa is the brainchild of Angela Nielsen, a strategic partner with AK in Zenith Creative Group.

Take a look for yourself – investing a few hours of your time in an on-line class is the quickest way to make social media work for you!

I’ve just finished a new White Paper entitled Creating a Compelling Client Experience, which was part of our third quarter Unlocking Real Value eNewsletter.

Given what has gone on in the markets over the past few months, many people are saying to themselves “Oh No, Not Again!” Personally, I think the odds of a double-dip recession have increased, as it has become evident that the economy is still struggling.

Yesterday’s market rally not withstanding, I think we are in for some rough times in the short-term. Let me emphasize short-term. As I have been saying for the past two years, the answer to the “Oh No…” is “This Too Shall Pass.”

Regardless of what happens this quarter, or next quarter, we are all in business for the long-term. And the challenge is to continually distinguish ourselves in our businesses. That’s the goal of the White Paper – it presents ideas for creating a client experience that will distinguish you from the competition – in any market environment.

Enjoy the paper and please let me know what you think.

There was an interesing article in the WSJ recently entitled How to Think Smarter About Risk. Many of the ideas are worth thinking about and incorporating into your business if you are an advisor, although I have to admit that there were a few things in the article that I disagreed with.

The primary point of the article is that while many advisors consider how clients feel about risk and how they feel about the market overall (bullish v. bearish sentiment) when devising an asset allocation strategy, they often neglect to take into account the client’s human capital – their personal balance sheet.

Human capital is essentially a measure of future earnings. For example, if you work in the financial services industry, even if you are very optimistic about the market and willing to take a lot of risk, since your job might be at risk in another market downturn, this risk factor should be incorporated into your asset allocation (in essence resulting in a more conservative approach). The article contrasts this to a professor with tenure, where their job is relatively safe. Human capital can be quantified in terms of beta – is your beta higher or lower than the market? Thought of another way, are you more like a bond (risk-averse) or a stock?

I agree that human capital should be considered when an investor and their advisor devise an asset allocation. Part of the value-added of hiring an advisor is that he/she is able to incorporate the many facets of your life into your investment plan. A good advisor will take the time to really get to know clients and not simply base the investment plan on the answers to a 10-question risk assessment. I also agree with the article that decisions to buy insurance should also take human capital into account. The more stable the value of your human capital, the more insurance you should have to protect it, and vice versa.

One point that I don’t agree in the article, however, is its contention that high beta investors – investors whose human capital tends to fluctuate with the market and who should therefore be somewhat more conservative in their investments – should have little invested in the market during the first decade or two of their working lives, and more than conventional wisdom recommends during the later years. This idea, in my opinion, fails to take into account the powerful value of compounding. Factor your human capital in – yes – let it dictate your investing – no.

I also disagree with the authors take on education. The premise that the decision of what degree should be pursued should be intertwined with a eye toward hedging your long-term human capital seems somewhat cynical. If my son wants to pursue an undergraduate degree in history on his way to law school or whatever else he does, I for one am not going to try and dissuade him.

My conclusion is that while the article takes the issue of human capital a little too far for my tastes, the concept itself is important and advisors that integrate this issue into their fact finding and asset allocation decision-making are not only doing their clients a great service, but perhaps distancing themselves from the competition at the same time.