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Small Funds Turn To PR to Be Heard


Leo Wells plopped on an office chair in a drab, Atlanta TV studio and prepared for his interview. There were television cameras and monitors, walls designed to absorb sound, a booth with all sorts of knobs and gadgets. But there were no reporters, no anchors and no show hosts to machine-gun questions at the president of Wells Real Estate Funds.

Instead there was Dan Sondhelm. The VP of public relations firm SunStar had flown from New York to this rented studio to train Kimbrell and her colleagues in the business of dealing with reporters, making TV appearances and getting their names in print.

Sondhelm asked the oddest questions, said Vee Kimbrell, the VP of Marketing at Wells. Assuming the part of a TV anchor, his interviewing style was designed to distract Wells from his objective of describing the company's business, which is offering real estate investment vehicles, including an $80 million mutual fund.

This is "media training," a sort of boot camp for professionals who need to beef up their public relations skills. During the past six months Sondhelm's firm has been recruited by nearly a half-dozen fund companies similar in size to Wells to conduct these sessions. The training involves rounding up a company's key executives and helping ensure they know what to say when they stare into a camera or land a reporter on the other end of the phone.

There's a good reason for interest in these skills. While larger fund companies, those of at least $10 billion in assets, have for years had huge marketing budgets and the ability to run broadsheet ads in the likes of The Wall Street Journal, smaller fund companies are finding it increasingly difficult to maintain their visibility in a crowded marketplace. The WSJ and The New York Times recently delisted mutual fund companies that do not hold at least $50 million in assets. And as an increasing number of companies turn to mutual fund supermarkets to distribute their funds, small firms find it increasingly difficult to get noticed.

Serious Shift

"There is a serious shift going on," Sondhelm said. "The companies have to do a lot more and be more aggressive and put their names out there."

So, PR firms say more and more fund companies are knocking on their doors. Sondhelm said he does as many as 20 media training sessions a year. And Ann Becker, president of the PR firm Thompson Becker International, says she's getting an increasing number of queries from small fund companies.

"Public relations allows them to stand up to the big boys, really, when they have good performance or a really unique story," she said.

It's a difficult proposition to resist for a small company trying to push its funds into the marketplace. An ad in a major publication can cost between $60,000 and $100,000, Becker said. That will also cover a year of public relations, say PR executives.

No Budget, Loud Voice

Despite their lack of budgetary horsepower, small firms have been able to raise substantial assets--at least for their size--in short periods using PR and a bevy of wholesalers. Profit Investment Mgt. has grown from $12 million in assets in its one mutual fund and separate accounts business to $117 million since it was founded in 1996, for example. And Sentinel Funds has grown from $1 billion to $3 billion in assets in eight years.

Touting Yourself

Sentinel has been touting itself to reporters as a technical expert in certain aspects of the industry. It promoted itself as adept in handling complex issues such as "stretch IRAs," which allow investors to maximize the value of the payments to themselves, their children, grandchildren and spouses while ducking heavy tax burdens.

Stories were picked up by Financial Planning magazine (which is published by MFMN publisher Thomson Financial) and brief stories appeared in the WSJ and USA Today.

Sentinel's efforts also landed one of its funds in a Money magazine story about nine investments that never lost money. "You could see over time a spike in money coming in as a result of that," said Sentinel President Joe Rob.

Profit Investment Mgt. meanwhile began promoting performance. It connected with Becker's company, which resulted in stories in Mutual Funds magazine and an appearance by founder Eugene Profit on the PBS television show Wall Street Week with Louis Rukeyser.

But the results did not come immediately. "You don't necessarily see the immediate impact with phone calls," Profit said. "People don't call up and say, We saw you in Mutual Funds magazine.' But as we began to go out and do presentations, they would feel like we were a well-known name. It was really a cumulative effect of the stories being out there that allowed us as a small fund complex to overcome newness."

Still, as a small company facing off with the big guns of the industry, Profit can't help but feel frustrated sometimes in communicating his message. "I constantly find myself attempting to validate that what we're doing from a performance standpoint is outstanding because of our size," he said.

He added: "I think you have to work with what you have."