The bifurcation of efforts at Fund companies is notable. The investment side is sophisticated, while asset gathering has technologically and strategically been left behind. Yes, trillions of dollars are under management, but some of it is structural (think 401K plans), and today there is serious competition from ETFs and other more flexible structures.
The Investment Side
Portfolio Managers regularly scour the world to uncover even the slightest investing edge to make even one extra penny per share for their investors (albeit to boost their performance records as well). The sophistication of the efforts, brain power and technology utilized such as weather balloons to gauge harvests to invest in commodities and equipment, to hiring PhDs designing trading algorithms are just some of the extremes Portfolio Managers will use to gain an edge, as they should. Managers invest and optimize all of today’s resources within the investment process – mathematics, macroeconomics, and screens – reaching all four corners of the earth for technology and enhancing trading systems.
Many PMs own or are very senior in their management company. This should be incentive enough to optimize asset gathering. Yet scouring and uncovering are not words often used in marketing. Senior management frequently does not pay as much attention to marketing and advertising. It is rare for them to take notice to what is so successful for the industries they cover and try to duplicate it for themselves. On the sales and marketing end, they continue to be stuck in the methods of a one-by-one / hand-to-hand sales process. There is some irony considering that many of the industries and sectors in which they invest are steeped in more advanced and efficient routes, leveraging today’s world of advertising, data targeting and sales funnels.
Modern Marketing Applied to Asset Gathering
Today, marketing and advertising can be leveraged and optimized for asset gathering. Advertising can build brand and create awareness of your firm and funds (the top of the funnel). When it is combined with data targeting it can bring qualified prospects (Financial Advisors and individual investors) into the process of consideration for your firm, its investment process, and your specific products. Professionals and individuals are more likely to invest with a firm that they recognize and hold in high esteem, rather than choosing one based purely on track record or investment theme.
Focusing deeper on marketing today and keeping current means leaving the legacy methodologies and technology behind, which can be hard for larger firms. Today, the greatest “marketing solve” is for Financial Advisors to self-identify interest. I remember as a former portfolio manager, our distribution wholesaler bringing me from advisor branch to branch to present. It worked, and we gathered assets. BUT I found it to be a process for negative selection. I learned quickly that the big gun advisors rarely showed up for a slice of pizza and my presentation on the investment thesis and process. That being said, the big guns even with little time will listen. It also means that simply having gained assets does not translate into enormous amount of money is not being left on the table. It is also now proven that a similar amount of effort (and budget) can yield far more optimal results.
Today, sophisticated data targeting can be coupled with predictive analytics, empowering Mutual Funds with the ability to target FAs they haven’t yet met, the ones with the highest levels of assets in their strategy, advisors they do not yet have a relationship with, all the way to targeting the analysts they most respect. Similar formulas work for retail investors.
Engaging advisors and investors is the big touch-point in 2015, with closing new assets as the goal. Many Mutual Funds will miss out and others will hit the mark way too low (and assume they have achieved great success). Buying mass media and having ads on the internet is far from an effective digital or marketing strategy. Success is measured in assets gained, scale and ROI. Portfolio Managers can learn from the sectors they cover, advanced mathematics, big data, and predictive analytics. Small and mid-sized firms can and will obtain the ability to level the playing field and gain material long-term assets, and larger managers can create even more dominant and defend-able positions.
Additional reading of interest:
http://www.marketingcharts.com/traditional/us-cmos-dogged-by-roi-questions-45708/
https://econsultancy.com/reports/value-of-marketing-2