Vanguard plans to offer digital marketing tool for advisers

Largest mutual fund manager hopes that the tool will enhance relationships for and with advisers

Jul 7, 2015 @ 3:40 pm

By Trevor Hunnicutt

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The Vanguard Group Inc., which became the world's largest mutual fund company after an ongoing marketing campaign to woo financial advisers, will launch a service this month to help those professionals to communicate their own value to clients and prospects.

The Valley Forge, Pa.-based money manager's new online service, dubbed the “Client Relationship Center,” will, among other features, allow advisers to generate customized brochures for their clients. The documents will include value statements outlining an adviser's approach to managing wealth, client meeting agendas and a list of services that they provide to clients. The materials will display each adviser's logo and information, not Vanguard's.

Vanguard's new program reflects a belief that its growth will be driven in part by financial advisers, and it comes as advisers are “grappling with their value proposition,” according to Dave Swanson, managing partner at SwanDog Strategic Marketing, and an industry specialist who is not affiliated with the new Vanguard effort.

“It's symbolic, if nothing else,” said Mr. Swanson. “Everyone responds so quickly in this space that if what Vanguard is doing gets any demand, you'll see other firms come out with something that looks and smells like it pretty quickly.”

Vanguard, which manages approximately $3 trillion in assets, may not exactly be in the business of supporting financial advisers' practice-management efforts. But they've built one of the best-known brands in retail investing. After building a sales effort to reach out to advisers and large broker-dealers that started in full force in 2002, the firm built an enterprise that helped it become the top mutual fund and exchange-traded fund brand by combines assets, according to Morningstar Inc. It's fought for that distinction against formidable firms, such as Fidelity Investments, BlackRock Inc. and American Funds.

In May, Vanguard officially launched its own automated investment platform, Personal Advisor Services, stoking fears that their efforts might compete with financial advisers.

In recent years, the firm has tried to combat those fears. That effort includes the firm's “advisor's alpha” concept, which argued that financial planners can add “about 3%” to their client's return through investment selection, rebalancing, behavioral coaching and other services. Vanguard's adviser-sold unit now accounts for a third of the firm's assets and about half of its sales.

Michael Lucci, a top sales executive at Vanguard, said the idea for the Client Relationship Center came from conversations that the firm's fund-sellers had with advisers. He said he hopes the service will allow advisers to build better relationships with their own clients and with Vanguard.

“This is a tool to help them be more consistent,” said Mr. Lucci. “Continuing to build on that is going to be critical for us as we build relationships with advisers.”

“This only helps an adviser that doesn't have the wherewithal to do it themselves,” said Daniel P. Wiener, editor of the newsletter Independent Adviser for Vanguard Investors, in an email. “Suppose I'm a prospective client and I go see a couple of advisers to interview, and they both show me the same document with a different name on it? Impressive? Not.”

Vanguard said that it built the platform in consultation with advisers and a series of focus groups. The company plans to add features in the coming months.

"The Client Relationship Center will enable advisers to more easily create customizable communications that can be made to look and feel unique," said David Hoffman, a Vanguard spokesman. "Importantly, this frees up advisers to spend more time on the practice of wealth management."


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