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... but Big Firms Can Afford to Be Aggressive

Despite these difficult times, Putnam Investments is the fourth largest fund company in terms of assets under management. The firm continues to market aggressively, particularly to advisors, in an effort to win new assets, according to Gordon Forrester, director of marketing for Putnam Retail Management. Putnam's approach is in sharp contrast to many smaller fund companies (See Small Firms page 2).

"We're always aggressive from a marketing standpoint, irrespective of what the market environment is," said Forrester.

Maintaining an aggressive approach is a necessity because of the firm's size, according to Forrester. It is critical, especially now, that the firm continue to market itself to advisors and update them on what is going on with the economy, the markets and the firm, he said. All of Putnam's 66 mutual funds, which hold about $313 billion in assets under management, are sold through advisors. Unlike perhaps more loyal shareholders of smaller, direct funds, advisors that Putnam targets are also being aggressively courted by other firms. Regardless of market conditions, Putnam has to continue to develop the advisor relationship as well as help advisors gain business themselves, according to Forrester.

Putnam Steams Ahead in Advisor Business

"Budgets have not been cut. We're continuously trying to find ways to help advisors, in good times or bad times," he said. "The one constant that drives everything we do is basically helping our advisors build their businesses and informing them as to what's going on. Whether or not it's a good day in the market or whether or not it's a bad day in the market, that's a constant and it continues. And given the fact that the role of advice, the number of advisors and the number of people turning to advisors is increasing, that's the constant we have to live by."

Despite the competition for advisor business, the firm has not adjusted the loads on its funds at all and has no plans to do so, a spokesman said. As with all firms, Putnam's loads vary depending on share class; however they are consistent from fund to fund. Standard loads on class A shares remain at 5.75% for Putnam's equity funds and 4.25% for fixed-income products.

In the week following the attacks of Sept. 11, Putnam set up a series of conference calls with portfolio managers targeted specifically at brokers and top level advisors, according to Forrester. On Sept. 14, the firm issued a special report' on its capital markets outlook to try to shed some light on what the impact of the attacks could mean from an economic and investment standpoint and has regularly updated the report and sent it out to advisors.

Putnam has also tried to utilize its advisor site as much as possible, including commentary from its in-house economists and the "Putnam Perspective: What's next for the economy, the markets and the funds?" The firm has also posted on its advisor site literature on sales ideas.

"As you know, it is during the difficult times that your clients count on you most," the sales literature says.

The material then presents sales ideas regarding saving for education and retirement as well as rollovers, distribution and estate planning, and offers all of Putnam's contact information.

"We're really making sure our reps are armed with what's going on, what it means from an economic perspective and what it means from an investment perspective," said Forrester. Putnam does not disclose the number of wholesalers it uses. "We're trying to provide advisors with a lot of ideas on strategies that work in volatile times and ways in which they can continue to improve their business with their ultimate clients. That's been our major focus."

The firm has not ignored its individual shareholders either. There are far too many shareholders to contact each one (Putnam has about 13 million individual shareholder accounts), so the firm has tried to provide as much information through its shareholder site as possible, according to Forrester. Putnam created a Web broadcast that first aired on Sept. 14 and included comments from Lawrence Lasser, CEO of Putnam, and other key executives on the effects of the terrorist attacks and the firm's outlook on capital markets. Still, the emphasis for Putnam, regarding marketing, continues to be on advisors.

Compared to many small firms, Putnam's marketing decision process is much more complicated. The firm must incorporate input from a variety of resources and implement marketing initiatives accordingly, said Forrester. The firm would not disclose the size of its marketing team. That team is charged with integrating feedback and advice from advisors, advisor focus groups, brokers, wholesalers, the firm's telemarketing group, as well as the recommendations and needs of all of the firm's investment divisions, according to Forrester.

"There are those multiple entrance sources, and it's also a question of us working together with the national sales manager, the heads of the key account relationships, and my boss [Richard Monaghan, head of Putnam Retail Management]. And we use all of that to try to figure out what the priorities are and what the focuses are at any point in time, and then on the tactical end, on the long term side of things."

Once the decisions are made, their implementation time fluctuates greatly. "Some ideas you can implement in half a day, others can take 6 to 8 months, depending on the scope, priority, and commitment," said Forrester.