Though performance and quality of research remain dominant themes in advisers' decisions on whether to recommend a product provider, their emotional responses to certain companies play a key role, too, Cogent Research said.
American Funds, Prudential and BlackRock's iShares stand out qualitatively. And though Prudential has "strengthened its grip" on advisers with its variable annuities, American Funds and iShares have both lost a little ground to competitors since last year, the report said.
Brand loyalty is fleeting, Cogent reported, and Franklin Templeton is snapping at American Funds' heels, coming in a close second in emotional brand strength. Both Vanguard and SEI Investments Co.'s ProShares gained emotional market share from iShares. Meanwhile, though Prudential got a little stronger in its market, Prudential PLC's Jackson National, in second place, lost ground to Sun Life.
Competition in every market is extremely tight, with companies separated by just a few percentage points in most cases. "If companies don't deliver on some deep-rooted emotional level, advisers will look elsewhere," said Christy White, the principal of Cogent in Boston. The financial services world has learned a lot from consumer goods marketing, the sort of messaging that says, "Your toothpaste cleans teeth, but mine makes me look sexy," White said.
For example, American Funds held on to its favorable position in advisers' minds despite disappointing performance in the past year. And this is largely due to the emotional connection it has carefully built with advisers over the years. "American Funds has a clean, consistent story, and its marketing materials make it easy for advisers to talk to their clients about having such a solid company behind them," White said.
That is important because now, more than ever, clients are asking pointed questions about what an adviser recommends and why. "If an adviser can tell a clean story about products and processes," she said, "that adviser is more likely to choose that brand."
Advisers also respond to brands that promise solidarity and the personal touch, Sun Life, for example. "They understand your pain," White said. "They're not just sympathetic, they're empathetic, and they can provide some solid sales ideas" in difficult times.