Sign up today and take advantage of member-only content — the kind of timely, cutting edge industry insight that only Money Management Executive can deliver.
  • Exclusive Online Only Content
  • Free Daily Email News Alerts
  • Asset Management Blogs

Advisers Want Fund Firms To Help Them Build Business

What kind of marketing support do financial advisers want from mutual fund companies?

A new report, "Effectiveness of Mutual Fund Marketing and Sales Strategies," conducted by the market research firm Rothstein-Tauber of Stamford, Conn., suggests that while glossy brochures are essential for brand building and investor education, advisers more greatly appreciate business tools designed to help them build their businesses and save time.

Specifically, fund companies received high marks from financial advisers for sharing customer-prospecting databases, providing pre-qualified leads or software to assist in prospecting and arranging educational seminars to build an adviser's name recognition. Advisers also appreciate help in transitioning from a commission-based to a fee-based business and chat rooms at fund company Web sites where they can exchange ideas and information with one another.

In the marketing/collateral realm, advisers said they appreciate a wide range of educational materials, from audiotapes and CDs on various investment topics, to quarterly newsletters imprinted with their own firm's name rather than the fund company's name.

The Rothstein-Tauber report also found that advisers appreciate the advertising fund companies direct toward consumers. "Perhaps 10 years ago financial advisers saw themselves in competition with the fund companies, but that's not the case today," said Nancy Salk, vice president of financial and investment services at Rothstein-Tauber. "In fact, financial advisers see themselves in an alliance with mutual fund companies. Advisers understand that when a mutual fund company advertises, it helps their efforts."

According to Salk, fund advertisements directed at consumers make them more comfortable with fund brands, and this makes it easier for advisers to sell them product. "The less explaining of the brand that the adviser has to do, the easier his or her job is," she said. "One of the last things an adviser wants to do is to sell the image of a fund company to the client. Clients will ask the obvious questions about a company they have not heard of , such as what its history and approach are. Those are not the questions advisers want to spend their time answering. When, over time, a fund company communicates its message directly to consumers, the consumer is much more receptive when the adviser presents the individual funds."

Salk noted that the fund brands that advisers identified as strong marketers included AIM Funds of Houston; American Funds of Los Angeles; Fidelity Investments, MFS and Putnam Investments, all of Boston; Franklin Templeton Investments of San Mateo, Calif.; and OppenheimerFunds of New York.

Additionally, the Rothstein-Tauber report found that advisers view good customer service as a fund company's obligation. "As it becomes more difficult to distinguish one fund from another in terms of holdings or investment style," Salk said, "advisers are making the distinction by evaluating both the service the fund company provides to their clients and the tools they provide to help them to grow their business."

Has the market downturn resulted in advisers looking for additional services from fund companies? "Advisers may be asking for slightly more help reaching customers, but the basic need has been there all along," Salk said.

"Effectiveness of Mutual Fund Marketing and Sales Strategies" is based on interviews Rothstein-Tauber conducted in February and March of this year with nearly 100 financial advisers. "We spoke to a cross section of advisers, from solo practitioners to those working at the larger firms, and were careful to keep our group regionally diverse," Salk said. "After selling our report to several financial service companies, we felt there was a lot that we could share with the general public without giving away too much of the study."

This fall, the firm will study the trans-generational transfer of wealth from Baby Boomers to Gen X, a market segment that firms do not yet perceive as critical but should, Salk said. "Fund companies need to reach this group now," she said.