The financial services, wealth management, and banking industries are highly competitive, and effective marketing is critical now more than ever for prospect acquisition and client retention. While estimates vary, there are approximately 300,000 financial advisors who work across a range of industries. The financial services industry is the third largest advertiser behind Retail and Consumer Packaged Goods (CPG), investing more than $36 billion in digital ad spending alone in the US in 2024; this increased 18.2% from 2023, and is expected to grow to nearly $43 billion in 20252.
According to financial marketers, the three biggest challenges that stand in the way of achieving goals and effectively marketing financial products and services are: 1) reaching the right audience (52%); 2) generating traffic and new customers (48%); and 3) keeping up with the competition (44%).
Net, a financial advisor or institution needs to stay on top of marketing trends or risk falling behind. This article examines the top trends in financial services marketing and offers suggestions and solutions for capitalizing on these trends cost effectively.
In the past, personalization meant including a target consumer's name in the greeting of an email or piece of direct mail but sending the same message to everybody. Obviously, this falls far short of true personalization, in which content is made specific to an individual.
Why is personalization important? Research by McKinsey indicates that companies excelling in personalization generate 40% more revenue than those who do not use personalization effectively.
Effective personalization involves several aspects:
Financial institutions began targeting prospects and clients based on demographic or socioeconomic factors, such as employment status, net assets, or net income. This is a good start, but two people who look the same on paper may have very different personal priorities or characteristics, such as risk tolerance. Analytics-driven targeting has improved personalization significantly, using past client behaviors to predict future behaviors and needs. For example, a client who has invested in higher risk assets in the past may be more open to new and innovative financial products. Another example is predicting which clients likely have accounts at other institutions, offering a conversion opportunity.
Again, two people who look the same on paper -- even based on past behaviors -- may have very different motivations and reasons for those behaviors. For instance, two people may have invested in a lower-risk, blue chip stock. One investor has very low risk tolerance and values consistency and predictability over a chance for higher returns. Another person invested in the same blue chip stock because of an emotional tie from personal use of a product or a familial history of investing in that company. However, the latter person would welcome the opportunity to consider more volatile (or "exciting") investments.
Psychographics are the key to understanding people's attitudes, values, personalities, and lifestyles, which are key to their motivations, priorities, and communication preferences. Psychographics do not replace demographics, socioeconomics, or behavioral data but enhances these data by providing a "consumer lens" for interpreting WHY people do what they do. Targeting prospects and clients based on psychographic criteria heightens the likelihood of delivering highly relevant content and marketing messages.
Echoing the points made under Targeting above, different people respond to different messages and content, and demographic & socioeconomic characteristics are insufficient for determining the most effective messaging and value proposition to activate desired prospect or client behaviors. What a financial advisor says, and how they say it, might inspire and motivate Client A, but it may fall flat or even turn off Client B.
Psychographics will enhance the likelihood that a message will resonate on a deeply personal level. Topic, word choice, and tonality of an effective message can vary by individual, and psychographic insights can inform these considerations. Imagery, graphics, colors, and layout can also be personalized to appeal to various psychographic profiles. True personalization means taking all of this into consideration with prospect and client engagement.
The vehicles or media (i.e., channels) with which a financial advisor engages a prospect or client can be as important as the message itself. Some client types prefer email, others prefer phone calls, while others prefer direct mail (while others throw out mail without even looking at it). These preferences can also depend on the topic of the communication; a client may want one channel for marketing but another channel for educational content. Most likely, a mix of channels will be most effective at reaching intended recipients across various touchpoints. If the channel or channel mix is not personalized for the intended recipient, the message may not be received.
Moreover, some clients may desire higher frequency of communications while others have a much lower tolerance and threshold for message fatigue. Preferences in time of day or days of the week for communications can vary across prospects and clients, too.
Psympl worked with Ipsos, the world-class market research company, to conduct a study among a nationally representative sample of adults ages 18+ to understand consumers' attitudes, motivations, and approaches to finances, investing, financial advisors, and communication preferences. From this study, Psympl identified distinct financial psychographic segments, each of whom requires unique engagement strategies.
By engaging a prospect or client with messaging that resonates with their individual motivations, delivered via preferred channels, with an effective frequency and cadence, a financial services advisor or institution can achieve hyper-personalization that meets clients on their terms. Psympl syndicates these market research data for financial services stakeholders who seek deep consumer understanding to inform their marketing and client engagement strategies.
Artificial Intelligence, or AI, is technology that enables computers and machines to simulate human learning, comprehension, problem solving, decision making, creativity and autonomy. It is being adopted across industries quickly, though the financial services industry has been taking a more cautious approach, due to concerns about security, privacy, fraud, and other considerations germane to the industry.
However, AI offers significant potential for financial services across departments and functions, from fraud detection to asset/market risk assessment & management. From a marketing perspective, AI can increase capacity, reduce costs, and inform personalization through predictive analytics.
Generative AI (Gen AI) tools like ChatGPT can help develop marketing content almost instantaneously, speeding up the creative process while saving money: marketing agency fees may be reduced if the financial services marketing team produces basic marketing materials on their own, such as press releases and brochures.
Psympl's Psychographic AI™ can generate psychographic segment-specific content for a variety of marketing channels, including emails, text messages, social media, digital advertising, direct mail, RIA call scripts, and other vehicles. Advanced personalization based on client interests and motivations has never been easier.
AI can also be used for client support, through chat-bots and virtual assistants, 24/7. Important to keep in mind, though, is that certain client types may prefer the self-service aspects of AI support, while other client types do not like this form of engagement at all; this is where psychographic insights and past behavioral data are critical for client satisfaction and loyalty.
While video can be considered a channel, a subject addressed earlier in the article, it is an important enough consideration to merit its own focus. Video can be leveraged as a marketing or education vehicle to convey information or it can be used as a two-way engagement tool through videoconferencing and virtual meetings with a financial advisor or customer service.
Video tutorials, product/service demos, and explainer videos can help simplify complex topics. Short marketing videos can capture audience attention in an entertaining way. Consumers have been turning to Youtube, TikTok and other social media platforms to get their information and are being conditioned to rely on these platforms for guidance. This is especially true for younger consumers; according to Psympl's nationally representative market research conducted with Ipsos, Gen Y and Gen Z are significantly more likely to prefer social media for financial services marketing than are older generations. Additionally, this research shows that certain psychographic segments are more likely to prefer social media for marketing financial services, and these segments happen to have higher levels of investable assets.
Videoconferencing/virtual calls have gained widespread acceptance during and after the pandemic, and offer a means for convenient, 1-on-1, personalized interaction without the need for travel. This is especially important for maintaining a strong relationship with clients who live appreciable distances from a financial advisor, allowing the advisor to expand his or her service geography. This channel enables demos, data sharing, and recording capabilities for later client reference. For portfolio reviews and even alerts for investment opportunities, videoconferencing is among the top channels preferred, especially for Gen Y and certain psychographic segments with a high net worth.
Marketing automation can take on the heavy lifting of executing many campaigns across channels (omnichannel) with prompts or triggers based on recipient response. For example, a financial services marketing team may target different clients with content specific to their unique needs or interests using a Customer Relationship Platform (CRM). One campaign may have 3 waves of emails (or other channels, such as text messages or automated phone calls, if the CRM supports them) marketing a product or service to a subset of their client database. Another campaign may be a broadcast message to all clients with a company announcement or market update. A third campaign may involve 5 emails to drive brand awareness among a prospect list. These campaigns can be run simultaneously or staggered, scheduled within the CRM.
If a client or prospect responds to the communication, the CRM can automatically stop successive communications or send a follow-up message and alert the marketing team or financial advisor of this response. The CRM follows a decision tree of actions that adjust to the recipients' actions. Without automation, this can be a tremendous investment of human involvement that prevents focus on other marketing and sales priorities.
CRM platforms also track and report marketing metrics such as open rates, response rates, day/time of recipient interaction, A/B testing, and other important data to continuously improve and evolve campaigns. Automation is critical for scaling personalization.
While 72% of financial services companies use marketing automation, only 35% of banks have invested in marketing automation technology. There are many CRM and client engagement platforms, each with different advantages and capabilities. CRMs such as Hubspot and Salesforce are broadly used across industries, while other CRMs, such as Wealthbox and Redtail, cater specifically to financial advisors and wealth management. It is beyond the scope of this article to detail the pro's and con's of each CRM, but there are many articles online comparing various platforms.
Marketing is only as good as its ability to drive revenue. Brand awareness efforts are important to create and reinforce recognition, familiarity and credibility for a financial services company. However, brand awareness efforts alone are not sufficient for new revenue; these tactics clear barriers to lead generation and client conversion. Conversion depends on engaging the prospect or client with the right message through the right channel at the right time. How is this measured?
Email open rates and click-through are rudimentary metrics that are helpful but not direct measures of marketing effectiveness. What matters is whether the marketing effort results in conversions (conversion rate), and that the highest potential clients are converting (customer lifetime value, or CLV). and Return on Investment (ROI). That said, 37% of financial content marketers indicate that an inability to measure effectiveness is one of the top challenges they face. In fact, 50% of banks do not measure their marketing ROI.
The ABA Banking Journal from the American Bankers Association provides a useful and straightforward way to think about ROI calculation:
If you spend $25,000 to target 10,000 households and sell 100 of them, you know that your response rate is 1% and your cost of acquisition is $250.
One can compare different campaigns and marketing tactics to see which drives higher and lower response rates and conversions and at various costs of acquisition to maximize ROI. This applies to both new prospect acquisition and current client upsell and loyalty. The analysis can be done for different target audiences and psychographic segments to see which are "low hanging fruit" and which are conversion challenges. A marketing plan should focus resources against a Prime Prospect consumer who represents disproportionate growth and revenue opportunities over the next 12-18 months.
Psympl offers Psychographic AITM to enable financial advisors and wealth managers to leverage psychographic insights and automated content generation for enhanced client engagement, prospect marketing, and hyper-personalization. Psychographic AI does not replace a financial institution's existing CRM platforms or AI tools; rather, it integrates with and enhances these technologies to maximize their effectiveness and results without disrupting current operations. Whether a financial advisor manages dozens or hundreds of clients, Psychographic AI scales to deliver advanced personalization that resonates with each, individual client.
To find out more about Psychographic AITM, click here and you will be directed to solutions that keep you ahead of these marketing trends for a competitive advantage.