We all know about successful consumer marketing. So why should the asset management world be any different? These days, what you are – the most experienced, or most technologically advanced – isn’t enough to guarantee a sustainable competitive advantage. Adding the whistles and bells may keep you in the game, but to succeed you have to harness the full potential of the customer dimension too. If Coca-Cola were to lose all of its production-related assets in a disaster, the company would survive. By contrast, if all consumers were to have a sudden lapse of memory and forget everything related to Coca-Cola, the company would go out of business.
Successful marketing has combined the emotional and the rational aspects of communication for years. Where product and service choice increases, what you stand for and how you stand apart provide the basis for differentiation. Asset managers, for the most part, haven’t realised that they can use this to their advantage to sustain real growth in AUM by defining and leading markets with intangible ideas, concepts, and values and embracing new marketing channels and media.
Conceptual positioning – connecting the asset management industry with clients.
The industry is crammed with competing funds and has a systemic over-supply, in general. Larger fund companies with talented marketers have realised that positioning can help potential investors pick their funds out of a line-up of seemingly identical offerings. Applied creatively, this unique positioning can help establish a new competitive space where one particular fund is the only contender, or, importantly, it can adapt its existing positioning for new markets.
Brand strategy – a brand strategy that gives direction and makes value visible.
Brand strategy is all about strategic alignment: bringing together potentially disparate aspects of an organisation – products, services and ideas – in a way that makes perfect sense to the outside world, and is aligned to its business objectives. The challenge is to provide a fresh ‘outside’ perspective, keeping all of an organisation’s stakeholders in mind, and ensuring its value is visible to everyone.
Brand strategy isn’t about just having a nice logo and presentation, but rather the whole investor experience when they come in contact with your organisation. How the investors are greeted in the office and even telephone manner has an impact on brand perception.
Integrated communications – providing cohesive and memorable messages investors can’t resist.
A company’s marketing communications play a unique part in opening dialogue and building relationships with prospective clients. Every stage of a businesses relationship with its audience should always take a customer-focused view, because only relevant and credible communications will speak clearly to its customers, investors and employees. It’s important that this unique promise is communicated in the most effective way possible by taking a completely integrated approach to marketing.
Put simply, good brand communications build reputations and increase AUM by defining what a business stands for, who it wants to talk to, and how it wants to talk to them. For an organisation to be more successful it needs to ensure that its brand activity makes a positive rather than negative impact on its people and its customers.
Quite often hedge funds communicate poorly and their marketing material is out-dated and inconsistent. It is vital that funds come to realise the importance of branding and communication in order to stand out to investors with clarity and vision, using clear-sighted internal and external marketing material, including intelligent, user-friendly communications that engage their audience.
If a company is clear about who they are and where they are going, then they need a strong brand identity that communicates it clearly. A brand identity uses graphic design to create a unique and compelling visual communication of who you are and what you stand for.
Working with a design agency to develop a new brand identity will involve thoroughly researching a company’s market and competitors to give it not only an identity that is authentic and meaningfully represents who the company is, but also something different that will make it stand out in the market.
A brand identity can then be used across all communication channels, from stationery and business cards to website, interiors, sales tools, reports, advertising, recruitment, and so on. This ensures that all communications are consistent.
Having articulated a brand and having a clear identity is all well and good. Having a set of brand guidelines will ensure a company and its staff manage its brand communications effectively, from the use of the correct colours, to the amount of white space that should surround the logo, to stating a tone of voice for all communications (e.g., warm, official, academic, or fun). Designers work to develop a clear set of brand guidelines to make sure all communications are consistent with a company’s brand. Building brands is like building houses – they need strong foundations.
The mechanics of a good presentation
In asset management, the product that is being sold is, at the most basic level, a little squiggly line that hopefully goes up. That line is important, obviously, because it represents the value creation the fund has made or destroyed. It is the job of the investor to judge all these squiggly lines and build diversified portfolios that are consistent with what their (or their client’s) objectives are.
Because there are a lot of firms competing for business, successful communication of the ‘line’ must convince the investor that the performance is replicable (or recoverable, i.e., opportunity) and that the controls are in place to avoid as many mistakes as possible, among many other things.
The perfect presentation doesn’t exist; it could always be improved. Something that works for one investor doesn’t work for another – the objective is to have a presentation that can speak to as many investors as possible.
What happens when an investor opens up a presentation is roughly the following: first of all, they will quickly decide whether the fund is for them. What kind of fund is it? Can they invest? Next, they skim through the following five pages within a minute or less to see if something catches their eye. They are looking for track record, AUM, how the fund performed during certain periods when other competitors struggled, etc. Then they will try to find the source of alpha – if it looks unique, they will dig further. The presentation will either succeed or fail within a minute.
Most people tend to prefer an initial presentation of around 20 pages. The purpose of this presentation is to give the investor an overview in order to decide whether they would like to delve a bit deeper and potentially have a meeting. If the presentation can’t communicate why the fund is a good fit in a portfolio in a succinct manner, then moving forward will prove difficult. Long presentations cloud the initial message, and presentations that don’t give enough information make the fund appear as though there is something to hide. It isn’t always about page numbers, but rather about efficient content. Think of it as the fund’s CV – if there is no credible work experience, then no hire. If the applicant has a two-page CV and two years of experience, then the candidate is not an efficient communicator.
The initial presentation’s sole purpose is to book a meeting to start the relationship. The allocator will frequently forward this to the relevant analyst who will tick boxes as to whether the fund fits certain criteria such as: style/strategy, AUM, background of the manager(s), performance, volatility, infrastructure, domicile, etc.
The easier you make it for the investor to do their job, the better. For example: contact details should be at the footer of every page. Index the relevant sections, explain what the fund is on the cover, make sure the second page has all the facts: liquidity, service providers, fees, ISIN codes, domicile, returns, inception date, managed accounts, etc. – the hard facts that allow them to judge any deal-breakers from the get-go. Investors will get really annoyed if they have to look hard for these things.
Then the typical architecture is:
Page 1: cover
Page 2: facts (as discussed)
Page 3: manager background
Page 4: performance
Page 5: performance analysis
Pages 6-11: investment process/criteria (how the fund makes money)
Pages 12-13: risk management
Pages 14-15: any additional bits like transparency, re-assurance.
Page 16: disclaimer
Page 17: end
Obviously, this isn’t hard and fast. Different funds will need to be presented in different ways. The real key is to be service-oriented and disclose what is necessary. “Short and concise” is always appreciated.
Psychological aspects that underlie the buying process
A typical mainstream allocator will see around 150-300 presentations per year. Imagine watching 150 commercials and tryingto remember a few of them after six months. Although some of them will stand out, it will be impossible to remember them all. Presentations are not all that much different, aside from the fact that an allocator will try their best to understand the key differentiators and empathise with what the manager is trying to achieve.
First impressions are critical. Not only is content important, but also the way the content is presented. Before the crisis, presentations looked “home-made”; they were based on the standard off-the-shelf Microsoft PowerPoint graphics. Logos were always blue or green in order to portray confidence and any graphics were Excel or Bloomberg-based.
After the crisis, the industry evolved, became more competitive and professional. More care was taken about branding and the message. The larger funds hired graphic designers to create a professional brand and the way they communicated was distilled almost scientifically. This was also the recognition that investor behaviour is partly to do with human instinct. A company’s image and the way the message is communicated inevitably play a big role in perception and saleability.
Another difference is that the larger funds have by-and-large perfected what they are trying to sell. However, larger funds have their own issues – every fund has a hurdle to overcome. Larger funds need to prove they can still perform; smaller funds need to prove other things.
This is why the message is so crucially important. The presentation is something that is always fretted over. Is the presentation making an impression? The complexity is that it is a technical document but should also appeal to its audience. The basics must be covered, but in a world where it is hard to differentiate between talent and technique, the presentation must also appeal on a more psychological level. We are all very human, and react on a few different levels. The skill of an effective presentation is to approach the various levels effectively.
There are many academic papers that address the science behind why people buy and how they do it, but behind the analysis and cold facts are two things that are important:
In a PowerPoint world, each page or series of pages is supposed to cover a key aspect of the fund. There are countless pages in many presentations that are “junk” pages. They are there for something, but don’t increase the saleability of the product. An easy way to solve this issue is to ask, “What do I want the investor to get out of this slide and is there a way that I can present this better?” It is helpful to look at each slide in this context; go through them one-by-one and then as a group. Making it easy for the investor and spelling it out in the subtitle can solve this problem. Investors are smart people, but don’t make them work for it.
This is where we see the biggest challenge: “Why would investors buy this fund?”
Another helpful thing is to define why someone would choose a fund over the peer group. Everyone has competitors and it is important to develop a good understanding of the buying process and what makes one fund a better candidate among other products. If a fund is small, the argument can be made that itis nimble. Larger funds can claim superior infrastructure, oversight and reputation. Some allocators are looking for predictability, others are looking at absolute returns under any scenario.
Whatever it is, every document and every slide needs to represent the way the fund merits being represented.