© 2020. This case was prepared by Erin Whittle and is not intended to illustrate either effective or ineffective

handling of a management situation. Some information may have been disguised in the interest of confidentiality.

This case is for educational purposes and is not to be reproduced for other purposes other than the case

competition without the permission from the author and the Scotiabank Vanier College National Marketing Case

Competition.

2020 SCOTIABANK VANIER COLLEGE NATIONAL MARKETING CASE COMPETITION

Prepared by Erin Whittle

Marketing Management Department, British Columbia Institute of Technology

Sunday, February 9, 2020

ENGLISH VERSION

ROTHENBERG CAPITAL MANAGEMENT Managing Growth: The Challenge of Client Acquisition for an

Independent Financial Services Company

Managing Growth: The Challenge of Client Acquisition for an Independent Financial

Services Company (Rothenberg Capital Management) This case was written by Erin Whittle, Instructor, Marketing Management Department British Columbia

Institute of Technology for the 2020 Vanier/Scotiabank National Marketing Case Competition. It is not

intended to illustrate either effective or ineffective handling of a management situation. Some information

may have been disguised in the interest of confidentiality. (This material may not be reproduced without

the express written consent of the author.)

The Rothenberg Group is a family-owned independent financial services company that includes

Rothenberg Capital Management (RCM) and Rothenberg & Rothenberg. i RCM is the wealth

management division of The Rothenberg Group and the focus of this case study.

The Rothenberg Group was founded in 1979 by Jack and Pearl Rothenberg and is now led by their

son, Robert Rothenberg (Chief Executive Officer). The executive team at the Rothenberg Group

have all had considerable tenure with the company: Helen Corrigan, President and Chief

Compliance Officer, has been with the Rothenberg Group since 1988 and has been President since

2002; Maria Ioannou, Chief Financial Officer, started her career with Rothenberg in 1997 and was

appointed CFO in 2017; and Robert Rothenberg joined his parents’ firm in 1993.

Investment advisors (known as Wealth Management Advisors at RCM)—like financial advisors at

many investment firms and major banks—provide planning and asset management to clients,

particularly high net worth individuals (HNWIs). Many clients are planning for their retirement

through the purchase of RRSPs, annuities1, and other investment products. Based on their client’s

investment goals, Wealth Management Advisors monitor, buy, and sell financial assets like stocks,

bonds, and mutual funds as well as provide investment, retirement, and estate planning and

ongoing investment advice and management. Clients can invest in Registered Retirement Savings

Plans (RRSP), Registered Education Savings Plans (RESP), Registered Retirement Income Funds

(RRIF), and Tax-Free Savings Accounts through Rothenberg Capital Management.

The financial advisors at RCM distinguish themselves as specialists with extensive experience and

training. 2 Robert Rothenberg, for example, is a Chartered Financial Analyst (CFA), Certified

International Wealth Manager (CIWM) and holds the Fellow of the Canadian Securities Institute

designation (FCSI). Wealth Management Advisors at RCM typically have a degree, decades of

experience in financial services or the investment industry, and have completed the Canadian

1 An annuity is a contract between you and an insurance company in which you make a lump sum payment or series of payments and, in return, obtain regular payments beginning either immediately or at some point in the future. The goal of annuity is to provide a steady stream of income during retirement. What is an Annuity? (2019). Investopedia. Retrieved 9 December 2019, from https://www.investopedia.com/ask/answers/12/what-is-an-

annuity.asp 2 “The terms ‘financial advisor’ and ‘financial planner’ are used broadly. These terms don’t always mean that a person has specific qualifications, expertise or certifications. Outside of the province of Quebec, anyone can call themselves a ‘financial advisor’ or ‘financial planner.’” Financial

Consumer Agency of Canada. (2019, April 16). Government of Canada. Retrieved from https://www.canada.ca/en/financial-consumer-agency/services/savings- investments/choose-financial-advisor.html.

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Securities Course, are designated Chartered Financial Analysts, or have other education and

certifications specific to the industry.

RCM has thousands of clients and nearly a billion dollars in investments. The personal work that

financial advisors offer to their clients entails RCM Wealth Management Advisors building close

relationships with the customers they serve. Clients share not just their financial information, but

their life challenges and goals with their advisors; together, they plan for home buying, growing

families, advanced education, retirement, emergencies and crises, and even death. Trust is key.

The high level of service Wealth Management Advisors provide, as well as their expertise, has

created a loyal client base.

Most customers are based in Montreal and Calgary, where RCM has offices, however, they are

considering opening an office in Toronto in the near future. Despite having four offices in the

Montreal area, 95% of its clientele is English-speaking; the brand does not quite resonate with the

Francophone community. Slightly more women (55%) than men (45%) are clients. Most of their

clients have under $250,000 in assets currently invested with RCM (see Appendix 1). Many clients

also have money invested elsewhere, such as with their bank, credit union, or caisses populaire.

Of course, RCM would like clients to consolidate their investments with them.

Unlike private wealth management companies, RCM does not have a minimum investment

threshold, although the ideal client is an individual or household that has in excess of $500,000 of

investable assets. Most of these high net worth individuals (HNWIs) are Canadians between the

ages of 55 and 64—frequently referred to as Baby Boomers, or Boomers—as they have the highest

total net worth (the median net worth of this age group is $669,500). People in this age group are

still working, but beginning to downsize and sell private business, creating sizeable liquid assets.ii

However, the Rothenberg Group’s clients are aging; 70% of their clients are over age 65, and 35%

are 75 or older. In fact, more of RCM’s clients are over 85 than under the age of 55. Many long-

time customers are accessing the assets they have invested with RCM as they retire, while other

client assets are being divested and disbursed upon their death.3 To continue growing as a

company, RCM is looking for a new customer acquisition strategy.

The Financial Services Industry

Financial advising and planning is big business in Canada. As of 2017, this sector managed $1.6

trillion in investment funds.iii Those investments are largely held by a small number of people, as,

like many other developed nations, Canada’s wealth is highly concentrated: 1.5 million households

account for 85% of investable assets.iv

3 Divestment is the process of selling assets (in the case of a will, this would include investments, life insurance policies, and properties); disbursement is paying out those assets to others (in the case of a will, the beneficiaries named in the will are the recipients).

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Figure 1. Financial wealth distribution landscape at the end of 2017 (Canadian Investment Funds Industry: Recent Developments

and Outlook)

Financial advising and planning are typically offered through seven channels (listed in order of

the amount of assets in each channel):

1. Full-service brokerages (like Rothenberg Capital Management, RBC Dominion Securities,

CIBC Wood Gundy, and many others)

2. Banks, credit unions, and caisses populaires branch advice

3. Banks, credit unions, and caisses populaires direct models (bank-owned online brokerages, like Scotiabank’s iTrade platform, BMO’s InvestorLine, and RBC’s RBC Direct Investing)

4. Financial advisors (including independent advisors)

5. Private wealth management (notably, Phillips, Hager & North Investment Management)

6. Online/discount brokerages (also known as “robo-advisors,” like Questrade,

Wealthsimple, and qtrade, for example)v

7. Direct sellers (often mistaken for pyramid schemes—which are illegal in Canada)

The primary competition for RCM are the banks, credit unions, and caisses populaires; in

particular, the “Big Six”: Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Nova

Scotia (Scotiabank), Bank of Montreal (BMO), and Canadian Imperial Bank of Commerce (CIBC),

and National Bank of Canada (NBC).vi Banks, credit unions, and caisses populaires are trusted and

known, offer convenience, and can bundle services to provide incentives for customers to invest

with the bank. As customers move from a focus on debt repayment to setting financial goals, banks

have the customer data on hand to be able to identify prospects and offer personalized and

targeted direct marketing of their financial products and services.

For those seeking value-added expertise, service, and product solutions, brokerages like RCM are

more trusted: recent surveys show Canadians are twice as likely to trust retirement savings

information and advice from a professional financial advisor (30%) than a bank advisor (15%).vii

Financial Services Customers

As Canada’s population of high-net worth investors ages, their needs change, and the focus of

their investing moves from wealth generation to wealth preservation. By 2031, all Boomers will

have reached age 65, and 23% of Canadians will be seniors. Once retired, their assets are sold off

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to finance retirement, then remaining assets are sold and distributed according to their will

(largely to their children) upon their death, resulting in a huge intergenerational wealth transfer—

as well as a significant turnover in RCM’s customer and asset base.

The next wave of HNWI will be Generation X and Millennials, which represent not just different

demographics, but an attitude shift. Mid-career Canadians (aged 35-54) are the most likely to be

saving for retirement and investing (including in their biggest asset, their home), while younger

Canadians (aged 18-34) are more focused on repaying loans (18%) and saving with no specific goal

in mind (19%) or for a house or condo (13%) (see Appendix 2).

Generation X is often typified as the do-it-yourself and skeptical generational cohort, and that

applies to investing as well. They are more than twice as likely than Boomers to say that their

financial choices are influenced by family, but even more likely to trust themselves—almost two

times more than anyone else, including a financial advisor.viii In fact, only 25% trust financial

services. ix Millennials are less skeptical; 53% trust financial services and 70% trust financial

advisors and almost half say they currently consult a financial advisor, but they do so in a different

way than older generations: “The role of the financial advisor as well as client expectations are

changing, depending in part on the investor’s age. While 15% of Boomers consider themselves

‘Delegators’—those who rely on their financial advisors to make all the decisions—only 10% of

Millennials do the same. Meanwhile, 39% of Millennials consider themselves ‘Validators,’ those

who consider their advisor more of a sounding board for their own ideas, vs. just 24% of Boomers.” x xi

Another challenge is financial literacy. Non-investors of all generations seem to have an equally

tough time learning about investing, despite Google and the huge amount of information

available.xii A surprising number of Millennials don’t even know they are paying monthly fees for

their banking, let alone how the MER (management expense ratio) on an investment is calculated

or why it matters.xiii (The average MER in Canada is 2.53%, so if your mutual fund statement

showed that your investment grew by 10%, it actually grew by 12.53%, because the MER is taken

off first—over 20% of your “earnings” from the investment. Similarly, if your mutual fund

statement showed a loss of 2.53%, it actually means that the fund itself showed no growth (0%),

but you have to pay the MER regardless.)

To bridge the financial literacy gap (and, of course, to acquire customers), there is an emerging

Fintech industry. “Fintech refers to the integration of technology into offerings by financial

services companies in order to improve their use and delivery to consumers. It primarily works by

unbundling offerings by such firms and creating new markets for them.”xiv Consumer-oriented

fintech (as opposed to the many B2B fintech offerings), is usually targeted at Millennials, in part

because of their rising earnings and inheritance potential, but also because software often doesn’t

help with the more complicated aspects of investing decisions that older investors need. Overall,

“Canadians tend to place a high degree of trust in financial technologies that have a long history of

operating in Canada, such as online banking, with lower levels of trust for newer services such as

online investment advice (often referred to as “robo-advice”) and peer-to-peer

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lending.” So, despite the hype and the mobile-first strategies of start-ups like Wealthsimple, most

Canadians aren’t ready to embrace online-only financial firms with their investments yet.

RCM’s Marketing Mix

These cautious, self-serve generations are making an impact on the kinds of financial products on

the market, too. In particular, exchange traded funds (ETFs) have grown from 2.9% of total

Canadian investment fund assets in 2008 to 9.3% in 2018.xv ETF is called an exchange-traded fund

since it's traded on an exchange just like stocks, although it’s a selection of stocks from that

exchange. Instead of picking a particular stock, an ETF is like a bucket of stocks, representative

stocks of a sector or of an entire exchange (for example, the SPDR Gold Shares ETF has a selection

of gold stocks, while the iShares Core S&P 500 has a selection of shares representative of the top

500 businesses on the U.S. stock exchanges). ETFs are similar to mutual funds in that way but have

low expense ratios and fewer transaction commissions.

Another product gaining in popularity is fund-based asset allocation solutions (fund wrap

programs) and fee-based accounts: that is, a flat-fee or fixed percentage of asset model. These

account types are popular because the fees are predictable and transparent and provide flexibility

for the brokerage to make decisions to meet the client’s financial goals.

RCM offers both ETFs and fee-based accounts to their clients, as well as “traditional” financial

services products, like mutual funds, bonds, and GICs.4 For some financial products RCM charges, a

percentage based on the value of the investments (MER), while a transaction fee is charged for

some other services. They have a complete price list on their website and charge competitive rates

(see Appendix 3a and 3b). Currently, 55% of RCM’s assets are in fee-based accounts (as opposed

to transactional accounts), and fee-based assets are growing. To provide clarity on investing and

to choose the model and products appropriate to each client, RCM Wealth

4 A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors. Mutual Fund Definition. (2019). Investopedia. Retrieved 9 December 2019, from https://www.investopedia.com/terms/m/mutualfund.asp -A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Understanding Bonds. (2019). Investopedia. Retrieved 9 December 2019, from https://www.investopedia.com/terms/b/bond.asp -GICs: A guaranteed investment (interest) certificate is a deposit investment security that Canadian banks and trust companies sell. Individuals and investors often purchase these for retirement plans because they provide a low-risk fixed rate of return. Guaranteed Investment (Interest) Certificate (GIC). (2019). Investopedia. Retrieved 9 December 2019, from https://www.investopedia.com/terms/g/gic.asp

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Management Advisors offer prospective clients complimentary meetings, goal setting, and written

overviews.

RCM’s Wealth Management advisors operate out of their four locations, three in Montreal

(Westmount, West Island, and South Shore) and one in Calgary. There are plans to open a new

office in Toronto in the near future. Each office has investment advisors, administrators, portfolio

managers, and a branch manager, as well as insurance advisor.

For website visitors and prospects, the rothenberg.ca site offers an overview of services supported

by testimonials, blog posts, financial calculators, and other resources. The primary call to action is

to book an appointment. The website is available in French (see Appendix 4a) and English (see

Appendix 4b).

Their website allows clients to login and see their accounts, view the account value, individual

holdings, and transactions as of the previous business day’s close. Clients have the option of

getting their statements, confirmations, and tax slips in hard copy or electronically. RCM does not

have an online trading platform at this time.

RCM has a solid search engine presence, in part due to their My Business profile on Google

(although they don’t currently have any reviews), ensuring top ranking for branded search on

Google in Canada (see Appendix 5). Unfortunately, an old article (from 2000) related to a fine paid

for record-keeping issue in 1998 appears in the first few results as well. They haven’t engaged in

search engine optimization (SEO) for other search queries, like “financial advisors,” as it is

extremely competitive and dominated by media (CBC.ca, Investopedia, Wikipedia, etc.), the

Canadian government (Canada.ca), and large firms.

RCM maintains an active presence in traditional and online media through ongoing and seasonal

campaigns. They do not have an internal marketing department, so most is based on a do-it-

yourself approach. Email newsletters, for example, are created in-house by the office managers.

The exception is social media, where they have hired a small company to post on their behalf to

LinkedIn and Facebook and to write blog posts. The company allocates between 3-6% of revenues

to their integrated marketing communications.

On LinkedIn, RCM’s social media agency shares relevant news posts as well as promotes their blog

posts to 269 followers (see Appendices 6 & 7). They share similar content to the 1,249 people who

“like” their page and the 1,237 people who follow the page (Appendix 8).

Robert Rothenberg also has an active LinkedIn profile, as well as maintaining the Twitter account

and website links (see Appendix 9). His LinkedIn profile has 1,144 followers. He reposts

Rothenberg LinkedIn posts along with other industry-relevant content, in addition to actively

engaging with others’ posts. The Twitter account has 171 followers and consists of reposts from

LinkedIn (see Appendix 10).

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New blog posts are published on the second Friday of every month to rothenberg.ca and then

promoted across Facebook, LinkedIn, and (via Robert Rothenberg’s account) Twitter (see

Appendix 11). Posts often feature prominently in email marketing as well. Posts are typically

informative, related to the products and services offered by RCM (see a sample in Appendix 12).

For existing clients and prospects, they have an email newsletter, using Mailchimp to manage

subscriptions and preferences. E-newsletters (see Appendix 13) are sent monthly, and e-blasts

(see Appendix 14) are sent periodically (based on current events or promotions).

RCM is a long-time advertiser in newspapers, and still runs ads in the Montreal Gazette and the

Calgary Herald, but the print audience has declined, and they are unsure if their ads are working

(see recent ad samples in Appendix 15). Radio ads are used periodically, if there’s a new product

or significant changes. In the past they advertised on local television as well, but it was very

expensive, and they couldn’t see the return on marketing investment.

Of course, they ask all prospective clients how they heard about RCM. Most new clients are

referrals, followed by general brand recognition and passing trade (people who see an office by

chance as they walk past it). Every time an investment advisor meets with a client, they ask for a

referral, and offer gift cards for referrals.

The Challenge

Rothenberg Capital Management would like to not just maintain their strong and trusted financial

planning legacy, but to grow their client and asset base in the shifting personal investing

landscape. How can a company like RCM leverage their experience, their capabilities, and their

loyal client base to attract the next generation of investors? How can they appeal to the cynical

Gen-Xers and anxious Millennials in an age of information overload and poor financial literacy? Do

they continue with their traditional media (newspapers and radios), since they have been

successful in building the brand to date? How can they leverage the reach of online channels to

make the most of their limited marketing capacity? How can they compete with the mega-

campaigns and reach of the Big Six and the tech-savvy approach of financial services apps? How

can RCM create a customer acquisition strategy that builds on their successes and creates a solid

foundation for future growth?

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Appendix 1: Current Client Assets

Appendix 1: Current Client Assets

Appendix 2: Financial Goals

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Appendix 3a: RCM Fees

Appendix 3a: RCM Fees

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Appendix 3b: RCM fees (cont.)

Appendix 3b: RCM Fees (cont.)

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Appendix 4a: rothenberg.ca (français)

Appendix 4a: rothenberg.ca (français)

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Appendix 4b: rothenberg.ca (English)

Appendix 4b: rothenberg.ca (English)

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Appendix 5: RCM Search Engine Results Page

Appendix 5: RCM Search Engine Results Page

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Appendix 6: LinkedIn Company Page

Appendix 6: LinkedIn Company Page

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Appendix 7: LinkedIn content sample

Appendix 7: LinkedIn Content Sample

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Appendix 8: Facebook Page

Appendix 8: Facebook Page

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Appendix 9: Robert Rothenberg’s LinkedIn posts

Appendix 9: Robert Rothenberg’s LinkedIn Posts

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Appendix 10: Robert Rothenberg’s Twitter profile

Appendix 10: Robert Rothenberg’s Twitter Profile

Appendix 11: Blog Page

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Appendix 12: Sample blog post

Appendix 12: Sample Blog Post

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Appendix 13: Email newsletter

Appendix 13: Email Newsletter

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Appendix 14: E-blast

Appendix 14: E-blast

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Appendix 15: Newspaper advertisements

Appendix 15: Newspaper Advertisements

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i Rothenberg & Rothenberg is the Rothenberg Group’s Guaranteed Investment Certificate (GIC) and insurance brokerage division. They represent more than 40 banks and trusts across Canada to provide extremely competitive GIC rates to clients as well as a multitude of insurance companies, offering competitive quotes on products such as life insurance, disability insurance, and critical illness insurance. Because of licensing requirements, it operates under a different name than Rothenberg Capital Management. ii Total and median net worth by age and family type. (2017). Www150.statcan.gc.ca. Retrieved 10 November 2019, from https://www150.statcan.gc.ca/n1/daily-quotidien/171207/t001b-eng.htm iii (2019). Ific.ca. Retrieved 10 November 2019, from https://www.ific.ca/wp- content/uploads/2019/06/Strategic_Insight_Canadian_Investment_Funds_Industry_Recent_Developments_and_Outl ook-2019.pdf/22469/ iv What aging HNW clients mean for wealth management. (2019). Advisor.ca. Retrieved 10 November 2019, from https://www.advisor.ca/investments/market-insights/what-aging-hnw-clients-mean-for-wealth-management/

v Robo-advisors (also spelled robo-adviser or roboadvisor) are digital platforms that provide automated, algorithm- driven financial planning services with little to no human supervision. A typical robo-advisor collects information from clients about their financial situation and future goals through an online survey and then uses the data to offer advice and automatically invest client assets. What Is a Robo-Advisor?. (2019). Investopedia. Retrieved 9 December 2019, from

https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp vi Along with more than 400 other investment firms in Canada, RCM outsources statements and common reporting to National Bank Independent Network (NBIN), a fully owned subsidiary of National Bank of Canada vii High net worth Millennials: Savvy with high expectations. (2019). Capital Group. Retrieved 10 November 2019, from https://www.capitalgroup.com/ria/practice-excellence-center/wealth-perspectives/high-net-worth-millennials- savvy-with-high-expectations.html viii High net worth Gen Xers: "Do-it-yourself" generation. (2019). Capital Group. Retrieved 10 November 2019, from https://www.capitalgroup.com/ria/practice-excellence-center/wealth-perspectives/high-net-worth-gen-xers-do-it- yourself-generation.html ix ibid. x High net worth Millennials: Savvy with high expectations. (2019). Capital Group. Retrieved 10 November 2019, from https://www.capitalgroup.com/ria/practice-excellence-center/wealth-perspectives/high-net-worth-millennials-savvy- with-high-expectations.html xi 2018 Canadian Full Service Investor Satisfaction Study | J.D. POWER. (2019). Jdpower.com. Retrieved 10 November 2019, from https://www.jdpower.com/business/press-releases/2018-canadian-full-service-investor- satisfaction-study xii Here's how your generation affects your attitude to money. (2019). World Economic Forum. Retrieved 10 November 2019, from https://www.weforum.org/agenda/2019/08/attitudes-investing-vary-according-age-group/ xiii Banks changing the way they do business to cater to young people loaded down with debt | CBC News. (2019). CBC. Retrieved 10 November 2019, from https://www.cbc.ca/news/business/millennials-debt-financial-literacy- 1.5254516 xiv Financial Technology – FintechDefinition. (2019). Investopedia. Retrieved 9 December 2019, from

https://www.investopedia.com/terms/f/fintech.asp#fintech-landscape xv Exchange-Traded Fund – ETFs. (2019). Investopedia. Retrieved 10 November 2019, from https://www.investopedia.com/terms/e/etf.asp

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