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After spending the last two days at the Personal Democracy Forum 2009 conference in New York, and hearing thoughtful and inspiring presentations from the CIO of the USA (love that title) Vivek Kundra about new efforts in government transparency (spend some time on http://data.gov) and from Alec Ross, a State Department official who challenged us on the role of the digital citizen in 21st Century Statehood – I am turning my attention to an upcoming meeting with the CEO of one of America’s leading financial services companies. And man, do these guys (as in the collective industry) need help talking to people. Seriously, Vanguard one of the finest mutual fund companies in the world has a blog where they ask for feedback, but don't publish comments. Check this excerpt out: What's your opinion? We welcome your feedback on this blog. Unfortunately, we're not able to publish readers' comments at this time. Rest assured that we'll read and consider your feedback carefully. Please don't use this blog to submit questions about your investments or customer-service issues.
And then there's Charles Schwab. These are the guys running the "Talk to Chuck" campaign. I checked out their YouTube channel -- it has 23 subscribers and 1,432 views in three years. Their Facebook page has fewer fans (888) than the racehorse who recently won the Preakness, Rachel Alexandra (893). As my friend Keith would say, "You can't make this up." So here's the deal financial industry -- if I were you, I would use the summer months to get serious about how you communicate. This is 2009 and your communications and outreach efforts remind me of 1989 (NB, the year the Berlin Wall fell and Tienanmen Square was challenged by students protesters). Take three lessons from recent world events and apply them to your business -- here are some starters: - Listen to What the "I" States Are Telling You: The events that transpired at the Iowa caucus in January of 2008 changed the campaign and later the world. That was the night that Senator Clinton won the vote of all traditional caucus-goers, as in those over 30, but got trounced by Millennials, those between 17 and 29, 57% to 11% by Barack Obama. If not for Millennials, Senator Clinton wins both Iowa and New Hampshire and most likely is back living at 1600 Pennsylvania Avenue.
While there have been more than a few serious and shockingly violent bumps in the road, the events that are happening in Iran today are also changing the world. The median age of an Iranian is 27 (ten years younger than a US citizen) and Internet penetration is low, but growing rapidly (up to 35% in 2008 from 10% in 2005) -- do you think the Supreme Ruler of Iran and their "elected" President will be hearing more from Millennials in Iran over the next few years?
Lesson for Financial Industry: Begin immediately to think about what you offer and how you talk with Millennials – the largest generation in the history of the world who will soon be establishing relationships with financial institutions that could last the better part of 50 years. Research that we’ve reviewed by Deloitte and Harris Interactive clearly indicates that Millennials are more likely than others to seek financial institutions that allows them to do their own research and provides a forum or vehicle to tap the wisdom from people they trust – parents and peers.
- Think about Argentina. The big political news of the last week or so was the bizarre actions and confessions of soon to be the ex-Governor and ex-husband Mark Sanford. I am in no way condoning his infidelity, abuse of taxpayer funds, or failure to serve the people of his state -- but if he just kept his phone on and was accessible, he would have saved himself, his family, his administration and his party some portion of his deserved ridicule.
Lesson: If there are two industries where citizens, consumers and other stakeholders demand accountability and transparency it is politics and financial services. With the right attitude, there are plenty of Web 2.0 technology options to get it done. With the wrong attitude, the best tools in the world cannot save you. "Pick up the phone;" be accessible.
- Be Careful of a Coup -- the other big lesson from the last week, thanks to the Honduran army. Now, I am not saying that you abide those who seek to do you or your organization harm, intentionally or not, what I am saying is that you need to build feedback loops and optimize. Always.
Lesson: Just like any investment strategy, every day you must optimize your communications by developing both pro-active and defensive systems to identify the word on the street and inside HQ. Listening and processing feedback from stakholders like employees, brokers, customers, targets, regulators, etc. is extremely important and relatively easy to do these days. Without listening, you cannot engage -- and like President Zelaya -- you may soon end up on the outside looking in.
[This blog made possible by the excellent excellent research and insights from Resident Millennials -- Jesse, Laura and Brian. Thanks guys]
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The last twelve months have ruthlessly exposed a number of embedded flaws in our once vaunted financial service giants. No weakness has been more destructive to their client's wealth and well being than the sin of "group-think". These institutions chased the same markets, bought the same securities, financed by the same leverage. They comforted themselves with benchmarks, napping in the safety of the herd. You know the rest of the story.
Money managers certainly need to embrace twenty-first century tools in order to align themselves with their clients REAL aspirations and tolerance for risk. But first, they need to use these tools to channel the creativity and wisdom (as opposed to simply data and knowledge) that exists "on the ground" throughout their organizations. They need to move wise and creative ideas directly and cleanly to decision makers. Running with the Bulls is nineteenth century behavior lavishly portrayed in twentieth century media between Buick commercials. In the twenty-first century, clients will migrate to the firms that can harvest and deploy creative wisdom.