With the era of endless wholesaler road trips passing and data’s rising importance, VettaFi’s President Tom Hendrickson and Chief Marketing Officer Jon Fee discussed the future of distribution at an interactive panel on Sunday at Exchange: An ETF Experience.
“Spoiler alert as it relates to ETFs – cost to enter low, cost to succeed high,” Fee began. He pointed to Elizabeth Kashner’s recent article about getting into the ETF business as a good companion piece to the presentation. “The future of distribution, it’s data,” Fee said, jokingly referring to that being the end of the presentation.
Hendrickson noted a quote from Forbes, “Data is the new oil. Like oil, data is valuable, but if unrefined, it cannot really be used.” The two then unpacked the what, the how, the why, and the who of data (the when is now.) He observed that the best data is superior to big data, and how that data translates into insights is vital. Data becomes more critical as clients, markets, and economies change.
Fee quoted Kobe Bryant to talk about the value of data and how understanding how to use data can be extremely powerful. “Can I jump over two or three guys like I used to? No. Am I as fast as I used to be? No, but I still have the fundamentals and smarts.”
Of course, the changing world doesn’t mean old ideas no longer apply. “The future of distribution is rife with a number of things that worked well for the last decade,” Hendrickson said.
“Data is information such as facts and numbers used to analyze something or make decisions,” Hendrickson said, putting out a definition of data.
In an interactive exercise, Fee and Hendrickson presented a few data points from their own lives and challenged audience members to figure out what they could sell to them. They also reviewed the missing data from their snapshots and asked audience members what data would also be helpful. “This is not big data, we’re not talking about Terabytes of data here breaking excel, but its best data,” Hendrickson proffered, noting how a few data points can triangulate insight.
The How of Data
According to Hendrickson, “for every minute spent organizing your data, an hour is earned.”
After demonstrating how a few pieces of data can reveal quite a bit with the previous exercise, Fee asked audiences if they had ever worked for a business with a ‘single source of truth’ (SSOT.) Shockingly, nobody raised their hand.
Fee continued to discuss how sales could be looking at one dashboard in many companies while marketing another. “Without an SSOT, you can end in conflict,” Hendrickson added.
“A work system is half people, half technology,” Fee shared. If people don’t have the proper technology, it won’t work, and if you have tech but not the people who know how to use it, it won’t work.
Hendrickson added, “it can’t be a siloed group of people who are data hungry or data-centric trying to push that on a company. It really has to be embedded in the company itself.” He then walked through how VettaFi uses data and dashboards to deliver insights efficiently.
Pivoting to the Why
Fee emphasized that data is always changing. Beyond data, the client is also changing, as well as the markets and economies businesses operate in. Twenty-two years ago, 7% of Americans looked online for product information. Today, nearly 100% of people do this.
Over two decades ago, ETFs had four issuers with 80 different ETF products available. Today there are over 200 issuers with over 3,000 ETFs on the market. “Now there’s more reason than ever to differentiate and have better data to improve your distribution.”
Hendrickson shared some statistics, including that only 21% of the current workforce feels confident in their data literacy (indicating 8 out of 10 people don’t feel comfortable with their data literacy skills.) When you move up to the senior people in the workforce and decision makers, the number only builds up to 24%. “Closing that gap is the opportunity,” Hendrickson said.
According to recruiters, the most sought-after skill is “data skills/data literacy.”
Who Succeeds With Distribution?
According to Hendrickson and Fee, the winners in the future of distribution will be people who lean into their core competency, partner with those who have aligned incentive structures, build agile data cultures, and continue to get reacquainted with today’s customers.
“There’s a digital body language happening,” Fee reiterated, noting that everything from email clicks to web habits can help fill in the data blanks. Fee made a case that is successfully integrating data into distribution starts with a distribution assessment of the organization itself.
Hendrickson reviewed the different types of “data rock stars” out there. The Soloist is an expert at harmonizing and curating multiple inputs. The Explorer pivots away from the raw data and uses UI to amplify insights and stay ahead of the trends. The Firebird, meanwhile, keeps a clean and flexible crew on hand and uses trusted success metrics and a healthy respect for behavioral data, even outsourcing for expertise if needed. “I think everyone is on a digital transformation journey,” Fee said.
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