SOI 2013 - Bank on It?
Find Out How To Tap Into The Financial Market
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The financial sector may be a downer for some distributors, but savvy ones are finding success in the market.
Not too long ago, Amplifii (asi/338337) set up what it thought would be a helpful Web store for a large financial company. The Web store, through which employees could purchase uniforms and branded apparel, seemed like a convenient way to let staff order what they needed and deduct it from their payroll. At the time it seemed like a nice revenue stream, but not necessarily a cash cow for Amplifii, which recently changed its name from Striking Solutions.
"We expected to do $30,000 in a whole year," says Ryan Floyd, Amplifii's executive vice president. "In the first 30 days we did over $100,000."
And it's not the only financial firm doing that level of order volume. Surely anecdotes like that might suggest a rebound in the financial marketplace, and a robust target market for distributors. Yet, Counselor's State of the Industry survey finds that the financial sector's share of distributor revenues fell from 12.3% in 2009 to just 7.8% in 2012.
Not that Amplifii would know it. The explosive Web store orders are similar to other sales experiences the Lawrenceville, GA-based distributor has had in the financial marketplace, which spans companies that are international giants and local firms.
The market may have dipped during the recession, but some distributors are now seeing a resurgence from the sector. And while not every financial institution is finding newfound income (some small firms are still struggling), there are certainly enough indicators pointing to a reviving marketplace. "I absolutely think it's coming back. The overall trend may be going down," says Floyd, referring to ASI's findings, "but if you're an aggressive company and doing the right things …" he adds, trailing off. "We're growing very quickly in that industry."
As Amplifii's experience illustrates, there are obvious signs of growth in the financial arena. And particular sectors that are often barometers of industry health are showing great promise right now, says Kathryn Morrison, president and CEO of SunStar Strategic, a public relations and communications firm that works with financial companies. Specifically, Morrison points to mutual funds.
"A lot of people accept that mutual funds are a barometer of people's confidence, and what's going to happen to the economy," Morrison says. So, it's a welcome sign that they've been growing substantially in the past year. Today, their value is colossal: a behemoth worth $13 trillion. Like most of the financial world, mutual funds took a hit in 2008 when everything "rocked and cracked," Morrison says. Since then "there has been a dramatic turnaround," she adds. "In the first quarter of 2013 more money went into mutual funds than in any quarter since 2004."
Plus, Morrison says, the market is shifting such that new players in the financial marketplace are starting to emerge, meaning more sales opportunities for companies trying to sell to them. Brokers fed up with negligible commissions at giant financial firms are increasingly striking out on their own, she says.
"As these big producers" from giants like Merrill Lynch open their own brokerage firms, "they need to develop their own brands. It's a trend that's been ongoing," Morrison says, and one she sees picking up steam in the next year or two. Premiums, she adds, are exactly what they're looking for to build their brands. That's a rich marketplace for distributors to mine, particularly since financial firms are often prone to buy high-quality products and apparel.
In fact, across the board financial companies seem to be doing just fine. Perhaps the one weak spot might be Main Street banks. "Some of the small banks are still struggling," Morrison says. "Most of them have gotten hurt by the new regulations."
But for every Main Street bank hurting, there are five more doing just fine, some distributors are discovering. Business has been so brisk at Amplifii that they're not even filling out RFPs. Financial firms are often easy to penetrate with small, local orders that, if handled well, can easily balloon to national and international business, Floyd says. And because brand image is highly valued by these companies, in an effort to build customer loyalty and trust, the banking industry is often looking for high-quality, higher-margin products and apparel.
That's true at industry trade shows as well, something the financial marketplace participates in frequently throughout the year. Companies such as Morningstar and TD Ameritrade have massive trade shows annually, Morrison says. "When times are good people buy all kinds of premiums for these conferences," she says. In recent years those conferences have been shrinking, Morrison says, but adds that they're having a rebirth in a recovering economy. Today, SunStar, which helps produce trade show booths, "has so much business coming in we can hardly get our arms around it," Morrison says. "Right now we have more business coming in than we have ever had before."