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Marketing Head Foresees Growth Offshore

Stephen Cone is the head of global marketing for Citigroup Asset Management and Private Banking at Citigroup of New York and formerly the president of customer marketing and development at Fidelity Investments of Boston. Cone recently discussed his goals for Citigroup Asset Management as well as overall mutual fund marketing with Mutual Fund Market News reporter Andrew Brent. An edited account of their conversation follows.

MFMN: What is your background in the financial industry? How did you come to Citigroup Asset Management?

Cone: I've been in the financial services industry since 1987. Before that I ran a database marketing company with some colleagues of mine for 15 years called Epsilon. I worked for the last 15 years at American Express, Citibank in the early 90s, KeyCorp, Fidelity, and I came here about a year and a half ago from Fidelity.

MFMN: Why did you leave Fidelity?

Cone: One reason is that Fidelity is the pinnacle of this business. Citigroup, on the other hand, is a relatively new company based upon the merger between Citibank and Travelers, which occurred about two years ago. So I viewed this as an opportunity to come into a work in progress and really help develop the asset management business around the world. I viewed it as really a neat challenge. Fidelity has been, for many years, extremely successful. I had a great time there, but this looked like a big opportunity and challenge for me.

MFMN: Regarding that challenge, what have you done and what are your goals for Citigroup Asset Management?

Cone: Well, we've got a few. One is, over the past year and a half, we've rationalized our brand strategy with regard to what brands we use in the asset management business in which parts of the world. That's number one, and that was very important to do. Number two, we have an internal goal of doubling the size of our asset management business around the world over the next four to five years. And number three has been to make sure that we do as much as we can in the cross-selling arena within Citigroup with our investment products. We are very pleased with the progress we've made over the past couple of years.

MFMN: How has your experience at Fidelity helped in conducting marketing for Citigroup?

Cone: Just more years in the industry really. The interesting thing about Fidelity versus my current position is that I've seen both sides of the business. Fidelity is really, for the most part, in the direct business, with the exception that they do have a decent part of their business where they sell through third parties. But still, the majority of their business is direct to the consumer, either on the retirement side or the normal investing side, whereas we don't sell products, for the most part, direct to consumers. We sell through intermediaries, both our own as well as other people. It's really two distinctive parts of the industry. I think that direct business is always a good business to understand because you can learn a lot from both sides.

MFMN: How do the strategies differ between marketing for direct sales and to intermediaries?

Cone: One of the biggest differences is that you definitely need to spend more money promoting your products in general media if you're going to your consumers directly. There's no way around that. And you see that evidenced in what direct companies, like Fidelity, spend on promotion. Whether it's Fidelity or Schwab or Janus or other companies that have a significant portion of their sales in the direct channel. Vanguard is an example. Vanguard says they don't advertise much. Well, they spend $40 to $50 million a year. I think that's a reasonable much.'

MFMN: How much does Citigroup Asset Management spend annually?

Cone: At the moment we're spending way below $10 million a year. Worldwide, we're spending $10 million ... and that's not just general media [TV, radio, print and outdoor advertising]. General media doesn't include brochures or collateral pieces.

MFMN: Does marketing to intermediaries require more of that other type of spending, on things like brochures and data materials?

Cone: That's correct. The intermediaries will also get their clients involved in conferences, video conferences or telephone conferences to listen to our fund managers directly on the state of the economy or on their philosophy or on both, which is something we've been doing a lot of during the first five months of the year.

MFMN: How has the downturn in the market affected mutual fund marketing?