Posts Tagged ‘regulation’

stopsignYesterday I explored how a fundamental aspect of content marketing — storytelling — can benefit your financial advisory business. Alas, regardless of how compelling your story is, your efforts to reach your target audience will be stopped dead in their tracks if you can’t get it in front of them.

That’s where distribution comes in. And that’s why, even if you don’t have content ready to distribute, you need to get your distribution channels up and running. Here’s an overview of the major types of distribution channels and why they’re important:

  • Social media: Now that the compliance barriers are falling and more clients and potential clients than ever are on social media channels, there is really no excuse not to be there. That being said, not every channel is for every financial advisor. Some are more friendly to specific audiences and types of marketing than others. Facebook, for example, is a great way to connect with clients on a personal level and find out what their day-to-day concerns are. LinkedIn is the top professional network where you can find out about promotions and job changes. Twitter is the leading issues-oriented platform. There’s nothing wrong with picking one of these and focusing your efforts there for a while before broadening your approach. The one tool you must use, in my opinion, is blogging. More on that next week.
  • Website: To distribute content effectively, your website has to engage visitors and have the infrastructure to support that content. This includes the ability to create landing pages for specific types of content and gather information about visitors who want to read your content. You need someone — whether that is in your office or a contractor outside — who can create landing pages and help you gather the information you collect so that it resides in your client relationship management system (CRM)
  • Search Engine Optimization: Closely related to your website, you need to make it easy for potential clients, influencers and the media to find you. By using keywords and optimizing your site, content and social media, you can make it as painless as possible for people to find you and learn more about what you offer.
  • Email Marketing: Even if you aren’t engaged in content marketing yet, you likely have hundreds of email addresses, if not more, of clients and potential clients. E-mail marketing campaigns using the content you’re going to create are an extremely effective method for engaging with prospects and converting them into clients.

To get ready to engage with prospects via content marketing, do whatever you need to do to get your website upgraded and looking good, even if it’s just updating the copy to make sure it reflects what you do today. Keep tabs on Google analytics to see who is visiting your site when and check various search engine terms to see where you rank. Beef up your social media profiles or at least pick a platform and establish a presence if you aren’t there.

Tomorrow, I’ll continue this series on content marketing with a look at helpful resources.

In a column “Balancing Good, Bad Finance” in Wednesday’s Wall Street Journal, David Wessel asks a provocative question: “How much finance is good?”

His thesis in the column is the growth in the financial sector that led to the financial crisis was caused by too much risk taking and borrowing by financial institutions. The financial sector came to be too large of a part of the economy. Too much of the growth in the system fueled the expansion of financial firms themselves, rather than funding overall investment.

So what amount of finance, in what doses, would benefit the global economy without the financial sector careening out of control and creating another financial crisis? There are several external and internal issues that I’ll identify and elaborate on in future posts:

  • Without prudent globally-consistent regulation and enforcement, the tendency of the financial sector will be to grow in an unconstrained, risky way, courting further financial crises
  • When financial institutions are being subsidized by the government via bailouts and safety net subsidies (deposit insurance, anyone?) they have a responsibility to act in a more ethical and restrained manner, especially when it comes to risk
  • Time horizons: corporate management, financial markets and government regulators have become insanely short-sighted. The viewpoint seems to be to either take the money and run because someone else will be there to take the fall later or deal with whatever issue is on the table with the easiest, most short term solution possible.

All of these factors are leading us right down the road into the next global financial crisis. It may not happen for a year or a decade. But I believe it’s inevitable without serious regulatory, political and philosophical reforms of the financial sector and financial regulation on a global level.

For true reformation of the financial system to take place, be effective and enforceable, it’s got to happen at the international level. Otherwise, banks and financial services companies can just do an end-run around it by moving out of the country.

While reforming the financial system in the U.S. boggles the mind — and, has yet to happen in any meaningful way — international reform presents a far bigger hurdle. At stake are issues of national sovereignty, national corporate interests, national and individual political ambition and the ability or lack of ability to subordinate all of these interests to the greater good. And that’s assuming agreement as to what the greater good requires, which will likely never happen.

I wrote about this for the now-defunct New York Society of Security Analysts journal, The Investment Professional in the Fall of 2009: Mending the Seams: International Regulatory Reform. In looking back over that story, not much has changed. Actually, maybe it has, for the worse. Because any momentum and willingness to reform has completely dissipated, at least from what I can see.

It’s back to business as usual, and that’s a shame, because we’re courting, at the very least, another financial crisis. Which could be worse than the last one. At least it will likely be different, which may be entertaining on some level, though no doubt devastating to millions of consumers who are barely making it financially right now.

That’s the other problem: the difficulty for regulators, even assuming agreement at the international level, is the tendency for the financial industry and the technology to always be one step ahead of regulators. Because when it’s an unknown unknown — in terms of where the next problem will occur — it’s difficult to address, even with the best will in the world. That’s tough even for known knowns, as Donald Rumsfeld would say, let alone known unkowns and unkown knowns.

Of course, we can argue that the last crisis was eminently foreseeable and preventable. A bubble inflated, regulations were either non-existent or ignored, problems reached critical mass and spread around the globe and the Fed, governments etc did what they thought they had to do to keep the global economy from catastrophe. Those actions are setting the stage for future problems, along with a very troubling lack of will to reform and to prosecute the offenders from the last crisis.

There’s also a compelling argument that there’s been an enormous expansion of high-risk lending on the part of retain bankers, including mortgages, corporate lending and personal loans. With governments around the world on the hook for guaranteeing deposits, the stage is set for another gigantic mess.

With a deposit guarantee, there’s no restraint on the bankers’ tendency to take big risks. Why should bankers restrain themselves? They know they are going to get bailed out. And what happens when the citizenry balks at bailing out these reckless retail bankers? Iceland, anyone?

And who are the real victims? The people who have lost their homes and the taxpayers who are on the hook for the millions of dollars, Euros and Pounds guaranteed by governments. As Frances Coppola points out (thanks to her for the ideas in these last few paragraphs) it’s a systemic problem.

Here are some links on point (some are dated, like my article, but still relevant):

  • The worm in the apple: what went wrong in retail banking Frances Coppola explains the real reasons behind the financial crisis (reckless retail bankers plus lack of regulation plus government deposit guarantees) and why there is no easy answer. However, there is an answer because it is possible (thought not likely IMHO) to break the link between bank lending and economic growth. Follow Frances on Twitter if you’re interested in her engaging posts on this vital issue.
  • Reinventing finance British Journalist Ian Fraser spoke passionately in Oct. 2009 about the need for financial reform and why it is vital that governments in the UK, US and Europe not resort to the quick fix.
  • Why we need to regulate the banks sooner, not later Financial Times blogger Kenneth Rogoff argues that bailouts aren’t enough. In the absence of more regulation and enforcement of those regulations, nothing will change. Tip to @Ian_Fraser