Marketing - Financial Services

Even while their advertising budgets fall, financial services firms are keeping their sponsorship budgets steady or have expanded them, according to several companies.

Attractive demographics have been the big lure for companies such as Charles Schwab & Co., American Century and TD Waterhouse, which have turned to sponsoring golf tournaments or players.

Twelve percent of TV viewers of the PGA Tour have a household income of between $100,000 and $150,000, and another 7% earn $150,000 or more, according to 2001 data from Mediamark Research Inc. The percentages jump for tour spectators to 22% and 14%, respectively.

"If you are a pristine brand in financial services and you've got a global reputation, it probably doesn't make a lot of sense for you to be sponsoring the World Wrestling Federation," says David Carter, president of Sports Business Group, a strategic marketing firm for the sports industry in Los Angeles.

"These major companies have done due diligence and recognize that using sports as a vehicle to sell their products works. Their targeted customers are watching the Golf Channel, or they are health and fitness freaks that are doing triathlons."

While golf rules, financial services companies also have sponsorship deals with teams in all the major sports leagues.

AIM Management Group Inc. of Houston sponsors two hometown teams, Major League Baseball's Astros and the National Basketball Association's Rockets. In Florida, the TD Waterhouse Centre is the home arena of the NBA's Orlando Magic, while the National Football League's Tampa Bay Buccaneers play in Raymond James Stadium.

But the demographics for those sports simply aren't as compelling as the ones for golf.

Fan demographics for professional baseball, basketball and football show that slightly more than 6% have a household income in the $100,000 to $150,000 range, according to an ESPN poll in 2001.

Fans of the National Hockey League had the highest percentage of earners in the category, with 7.4%.

For those four big team sports, an average of 3.5% of their fan households earned $150,000 and up.

"I think golf tends to have an overall higher demographic on an ongoing basis," says Glen Mathison, a spokesman for Charles Schwab & Co. in San Francisco.

Schwab advertises during golf tournaments and major sporting events such as the Super Bowl and NCAA basketball tournament because of the huge numbers of baby boomer and wealthy viewers who tune in to watch those events.

The company, which cut its advertising budget to $246 million in 2001, from $332 million in 2000, launches the TV component of a major new ad campaign this week, during the NBA's conference finals.

As sports on television have exploded, the opportunities for financial services companies to reach an upscale audience have grown in lock step, sports marketers say. And while TV commercials may be more of a scattershot approach to reaching an audience, sponsorships offer a more precise way to reach customers.

celebrity access

Sponsorship can mean getting a company's name mentioned in a broadcast and its logos on players' hats and shirts. It also lets companies entertain their best clients or top-producing distributors.

In the case of American Century Investments of Kansas City, Mo., some of its best customers get to play a round of golf with celebrities from the entertainment and sports worlds at the company's celebrity golf tournament.

"A sponsoring of an event or any athlete is more well rounded and gives you more antennas and tentacles than just straight advertising," says David Schwab, director of strategic marketing at Octagon, a sports marketing company in Washington.

Charles Schwab sponsors PGA Tour golfer Phil Mickelson and the Senior PGA Tour's Schwab Cup, a season-long, points-based competition. AIM Management Group in Houston has a deal with Joe Inman of the Senior PGA Tour. The TD Waterhouse Championship in Kansas City has been a fixture on that circuit for the past three years.

AIM says it sponsors events that appeal to financial advisers, the base of its fund distribution force. In its own survey of advisers and brokers, it found that 83% had an interest in golf, says Nancy Beck, vice president of sponsorships and promotions. While advertising budgets at other firms have declined, Ms. Beck says, her sponsorship budget has been level for four years.

American Century, with its celebrity golf tournament, says its sponsorship spending is up slightly.

"We believe that the sponsorship made sense for us over the long term because of what it delivers," says Michael Barr, American Century's senior vice president of corporate marketing. This year's tournament will be held July 17-21 in Stateline, Nev., and feature former Denver Broncos quarterback John Elway and former Vice President Dan Quayle, among other notables.

deepening relationships

"In addition to showcasing American Century before a broad national audience ... [sponsorship] also provides us with an opportunity to bring clients to the event, which allows us to deepen relationships, and our business is, like many businesses, a relationship business," Mr. Barr says.

TD Waterhouse Group Inc. of New York got into sports marketing four years ago with the New York Mets, and it has been growing ever since, says Paul Schell, senior vice president of customer communications.

Today, the company has its name on the Orlando arena, and sponsors several baseball, basketball and hockey teams, as well as a golf tournament.

Sports and financial services are a good fit, Mr. Schell says. "People who go to sporting events, who can afford to spend money to go there, are the same types of people that have the money to invest in the market. There's definitely a connection."

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Generating referrals, retaining assets


For some advisers, marketing is only an afterthought.

It is easy to fill the day with everything else that goes into a successful practice, but those that ignore marketing do so at their own peril.

Successful marketers know how to attract more of the clients they want, retain more assets and generate more referrals.

The goal of this column is to provide advisers with marketing strategies and tips they can put to immediate use.

But rather than offer them up unsolicited, I’ll be interviewing an adviser each month, talking about their marketing challenges and making specific suggestions.

Bob Neeley is an adviser who is serious about marketing. Based in Oklahoma City with LaSalle St. Securities LLC of Elmhurst, Ill., he focuses on the 55 and older market and has about $50 million under management.

A few times a year, Mr. Neeley mails a newsletter, produced by La Salle, to prospects and clients.

He regularly hosts workshops at the local Red Lobster to attract new clients.

“The content of the workshop is generic,” Mr. Neeley told me. “I talk about ID theft, taxes and basic investment strategies.”

The workshops have been very successful for Mr. Neeley on his home turf but less so in a nearby community where several advisers from a national firm are well entrenched.

Although replicating programs that work makes sense, he should consider targeting a message to this different audience.

Mr. Neeley told me that he makes a point of knowing what the competition is, so that without mentioning names, he could highlight how his practice is different from that of the national firm and how clients can benefit from that difference.

He might, for instance, discuss the advantages of proprietary versus non-proprietary products, or why a fee-based product can end up costing more than one with a sales commission.

Also, Mr. Neeley is accustomed to getting a certain number of meetings from each workshop, but it is possible that with a different audience it will take a little longer for the program to gain momentum.

It may be that prospects will need to have more interaction with him via telephone or mail before they take the next step.

Having made the initial investment, Mr. Neeley should remain in contact with the prospects for at least 12 — or, even better, 24 — months to see if he can arrange a meeting.

Increasing referrals

“Referrals are probably my weakest area,” he said.

“I tell my clients, ‘You send me a referral, and I’ll buy you dinner,’ and when I mail an evaluation form, I’ll ask for referrals then, too. But very little comes back.”

Since the best time to ask for a referral is face to face, I asked if he requested them during annual meetings.

“Not as I should,” Mr. Neeley said.” I run out of time or forget.”

This is a fairly common problem for advisers, yet not that difficult to solve.

First, Mr. Neeley should create an agenda for the meeting.

The agenda would include an update of the client’s family, professional and financial status, revisiting of financial goals, a portfolio and performance review, and a market recap.

At the end is the bullet point: “Your Advice.”

Assuming the meeting has gone well, when Mr. Neeley arrives at this last point, he should say to the client, “May I ask you a couple of questions about expanding my business?”

If the client says yes (which is almost always the case), the door is open to ask for referrals.

Another approach for Mr. Neeley would be to tell the client that he would like to work with other successful franchise owners or teachers or dentists like the client — and then ask, “If you were me, how would you go about this?”

Retaining assets

Mr. Neeley told me he has lost only one client to a competitor in the past several years, but since the average age of his client base is 65, he does lose them to infirmity and death.

“Once the money gets to the kids, it depends on what they are like,” he said.

“I had one who inherited $250,000 and almost went through it in a year.

“It’s hard to say how you are going to retain it beforehand.”

Although there certainly are no guarantees, it is possible for Mr. Neeley to develop a relationship with the children and even the grandchildren of clients beforehand, which will put him in a better position.

The easiest way is to start when the child still is under the parents’ roof (which these days can mean up to 30 years old).

Some advisers host a family picnic or take their clients and their children to a local ball game where they can get to know the children.

Brochures and workbooks for children on money and investing are available from some broker-dealers.

And for a birthday or holiday gift, there’s a wide range of appropriate books — from “The Berenstain Bears’ Trouble with Money” for toddlers to “The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of.”

Although Mr. Neeley has been an adviser for more than 20 years, his marketing strategy continues to evolve.

He has been testing newspaper advertisements in a publication aimed at those who are 55 years of age or older.

Mr. Neeley even recently went to a home and garden show to see if it might be a venue for prospecting. For him, trying new tactics, refining the results and expanding those that work is a formula that’s succeeding.