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Consent Marketing: Paving the Way for E-Delivery
How Passive Consumers have become Proactive “Prosumers”

The explosion of digital content and devices have created a change in how consumers respond to the media around them. The Silent Generation (b. 1919-45, and over 60 in 2008), the Baby Boomers (b. 1946-1964, and in their 50s in 2008), and the early Generation X’ers (b. 1965-1978, and in their 30s and 40s in 2008) all grew up in the era of mass media. But from 1990 onward, “mass” gave way to “interactive” as digital tools and bandwidth has turned Generation Y into producers of digital content rather than merely avid consumers.

As a result, consumers became “prosumers” – proactive, producer-consumers who must be engaged with media that is not one-way, and not merely interactive … but immersive. The prosumer communicates and gathers information digitally, through the Internet, e-mail, text messaging, social networking sites, etc. The good news is that paperless investor disclosure with XBRL-powered “layered disclosure” fits the persona of the prosumer.

What this means is that now, more than ever, is the time for financial services firms to embrace e-delivery. To do this, firms must first build an e-communications infrastructure that fits the needs of these prosumers remembering the old adage “different strokes for different folks.” Enterprise-wide, e-marketing programs must be capable of capturing the attention of the prosumer at key touch points; deliver tailored, relevant information and take advantage of the consumer and prosumer preference to access information on the Internet. When done correctly, it will allow financial services firms to capture this willing audience and promote the benefits of their e-delivery offering through an interactive, electronic communications channel.

E-Delivery and the SEC’s Summary Prospectus

The securities industry pays $1 billion annually to produce “big book” prospectuses – those mammoth multi-fund documents that are mass mailed to investors each year. Tack on supplements, shareholder reports, statements of additional information and other regulated mailings and the tab jumps to about $5 billion annually. However, the fallout from the recent financial market turmoil and the looming presidential election have created a “perfect storm” for a regulatory impact to hit by year-end. After a decade of false starts and failed attempts at fixing the cumbersome, costly “big book” prospectus, recent activity across the financial securities landscape holds strong promise that change may finally be here.

Underlying all these initiatives is a common goal to reduce costs and paper waste while communicating more clearly and efficiently to investors. The best method to achieve these objectives is to adopt an e-delivery strategy with investors, where they forgo using paper-based delivery and instead opt for electronic communications.

It’s not often that you can get regulators, financial firms and investors to agree – but there is universal consensus on this: the current paper-based approach to investor disclosure is too costly, cumbersome and complex. Worse, studies have found that two-thirds1 of investors don’t read their fund prospectuses at all. And who can blame them given many multi-fund prospectuses contain 30-40 funds while the average investor has only 3-4 holdings (meaning over 85% of prospectus information is irrelevant to the end user).

Today, top-tier financial firms such as Ameriprise, Citi and Fidelity are looking at implementing “paper-off” initiatives and reap 50-80% savings simply by moving its investor communications to e-delivery. It’s widely acknowledged that e-delivery is the most cost-effective form of document delivery because there are no paper, printing, postage or inventory costs. Not to mention, eliminating paper production greatly reduces a company’s carbon footprint and saves a tremendous amount of trees.

A New Opportunity: Best Practices to Get Consumers and Prosumers to e-Consent

Getting investors to cross over to the Internet to accept e-delivery requires an e-marketing communications strategy personalized to each company and its demographics. No matter what the corporate culture, there are three aspects of the strategy that need to be addressed including:

° Email address collection;
° An opt-in strategy to e-communications (by persona);
° An ongoing e-marketing communications program that can repeatedly deliver the e-delivery messages (by persona).

The e-mail address collection strategy requires a firm-wide integration plan and should leverage the four most common methods of communicating with the end consumer:

° “Transpromo” messaging on regulated mailings that uses the white space on envelopes to promote a behavior modification such as e-consent;
° Phone script “prompts” for Call Center Representatives;
° “Opt-in” alerts or pop-up messages on transaction pages and account files on the Web; and
° “Live” encouragement from advisors at the point-of-sale and on paper applications to push investors from paper to electronic.

Finally, and most important, is the rollout of your e-communications program – one that is carefully orchestrated by your marketing organization direct to your end customers and to your key sellers via an advisor communications plan.

Using E-Communications to Collect Consent

With 95% of mutual fund investors using the Internet and surveys showing that investors prefer the convenience of e-communications, the climate is poised for e-delivery provided you receive user consent to e-deliver their financial documents. Success in e-delivery requires much more than just a one-time e-consent collection campaign. Your firm must first establish end-user trust in the electronic channel by delivering a regular frequency of value-added marketing messages that are relevant and talk to their specific consumer/prosumer personas. These ongoing e-communications will provide the vehicle in which you’ll be able to promote your firm’s e-delivery services, continually growing e-consent adoption rates and eventually breaking the dependence on paper communications altogether.

Make E-Delivery A Tri-fecta for Investors, Your Business, and the Environment.

Mutual fund investors already make extensive use of the Internet in their daily lives and see the Internet as “the wave of the future” for obtaining investment information. In fact, Internet use among senior mutual fund shareholders has grown significantly. Nearly with nearly ¾ of all mutual fund shareholders age 65+ having Internet access -- up from less than 2/3rds in 2005. What’s more, over 50% of these seniors are going online at least once a day.

Making the move to e-delivery may take some initiative, strategizing and work; however, it provides significant and organizational-wide competitive advantages. Financial services companies spend over $350 billion annually on information technology2 yet the true return is not how much you spend on technology but rather how you deploy it. With a strong e-communications program, you can meet the needs of today’s online investors, reap positive bottom line benefits for your company’s and achieve greater environmental responsibility. Who would have thought that e-delivery could deliver so much green.

About the Author
Len Driscoll, is Chief Client Officer at NewRiver Inc., – creators of the leading central repository of mutual fund documents and data for financial services firms. Contact him via email at or call 978-247-7200.

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