Increased Industry Scrutiny no Reason to Avoid Press
October 4, 2004
MME: The financial sector has always had a guarded approach to speaking with the press, but you say firms have been unusually shy of the media as of late. How do you explain this trend?
Sondhelm: When it comes to mutual fund managers, yes they are guarded, but they don't have as many strict requirements for speaking with the press as upper management does.
Back in the late 1990s, when performance was going up, mutual fund managers were thrilled to talk to anybody because the odds were the story would be pretty flattering and generate sales. But now with Eliot Spitzer's investigations and flat performance, there's a lot of issues that would make fund managers resist the media.
Aside from the current climate, past bad experiences can lead many fund companies to avoid or resist dealing with the news media. Maybe they were misquoted or were frustrated because they spent significant time with a reporter without being quoted. Another big issue for fund companies is when a reporter calls for a specific story line. What many managers really want to talk about is their fund, their fund company and their investment philosophy.
It's very frustrating, so a lot of fund managers resist the process because they don't understand how to change being on the receiving end of inquiries. When that's the case, when a reporter comes to them for a certain story line, the reporter's in charge and it doesn't make it a whole lot of fun for the fund manager. It can even be scary for some, as well.
MME: Why is effective media coverage essential to a successful marketing strategy?
Sondhelm: The obvious reason is visibility. It helps attract and retain investors. You see it all the time when a reporter calls a fund manager, writes a flattering story and the fund's phones ring off the hook.
It also helps retain investors when your fund is not doing well and a client is thinking of taking money out of the fund. If you're talking about the fund and that you may be underperforming but are sticking to your strategy, you show you are in control of your portfolio, thinking long term and conveying all the basic messages. At least investors will think you are steering the ship.
Everybody in the sales and marketing departments of fund companies and in the organization overall are hungry for these articles. They energize the sales team. I was talking to a big fund company last week and they told me the No. 1 request from wholesalers is new positive news articles. The most recent news article they have is from 2002, but they're still using that article for their wholesalers. That's all they have.
And it's not just the wholesaling channel, it's also the 401(k) and institutional channels. Third-party endorsements really add credibility to their sales and marketing efforts. One of our clients just got a feature article in Barron's and they ordered 10,000 reprints to use.
The publicity on the mutual funds is used across distribution channels, including private accounts. It's often the same money manager who manages both the fund and the private account, so it's the same strategy, same people and you can cross over and leverage those articles for your institutional business. Many times we hear that the fund doing the publicity is really helping to speed up the sales process and add credibility to the institutional business. If you ask an institutional salesman why they won an account, it's typically because of performance or the relationship, but if they lose, it's typically because of the brand. "Nobody's heard of us," they'll say. So, leveraging your mutual fund for publicity is an excellent way to attract institutional money.
MME: You run a media boot camp to teach firms to better interact with the press. What is the main message you try to convey?
Sondhelm: You are not running a successful media program if you're resisting the media. Currently, the whole goal of the program is to help managers and firms to feel comfortable and stop turning down interview requests. We help them sound smart and look good so they can talk about their product.
There are a couple of keys to this, the first being the message. A lot of companies have been using a message, a story, an investment philosophy for decades and it never changes. Sometimes they need an outside perspective to come up with messages that sell. And it's not just about having the messages in written form. It's how you communicate those messages. Typically, fund companies have many spokespeople, and many times they're telling different stories. So first, we want to put everybody on the same page.