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Fund Firms Lean Harder on Marketing: Cluttered Market Demands Consistent Strategies


If asset management firms hope to break through the marketing clutter of an increasingly complex and competitive financial services industry, experts say they must start with a consistent, compelling message.

Such a seemingly rote task, however, isn't so easily accomplished, they warn. Oftentimes, firms are tripped up by the complex structure of the industry, or their marketing functions have been displaced or bogged down by a renewed emphasis on compliance.

"Sometimes an asset manager will have different groups selling through different channels - direct-to-investor, intermediary, sub-advisory, sometimes affiliated, sometimes not - so there could be three separate groups talking about how the firm manages small-cap growth, for example. You want to be sure they're all sending off the same message," explained Cindy Zarker, a senior analyst with the Boston-based research group Cerulli Associates and author of the study, "Asset Management: Next-Generation Strategic Marketing Organizations."

Zarker ranks Boston's MFS Investments and San Mateo, Calif.-based Franklin Templeton Investments as two large, full-service asset managers that have managed to maintain a formalized message across numerous marketing and distribution silos.

"They each have a very disciplined process, one that goes all the way from their wholesale units into their marketing literature, and at each point everyone is equipped with the same message on how they run an investment strategy," Zarker observed.

Franklin Templeton attempts to deliver consistent messages across all distribution channels, said spokeswoman Stacey Johnston. "With more than 1,000 products, 1,400 discreet literature types and thousands of employees delivering messages to the marketplace, it's important we actively manage this environment," she said.

Conveying a consistent message is actually one of the greatest challenges faced by what Cerulli calls "intermediary marketers," a term that encompasses all of the marketing-related activities designed to facilitate the exchange between asset managers and investors, via their advisers, and to some extent professional buyers.

Branding and advertising can play a key role in honing a message, Zarker said. It's a topic that's often discussed, but remains a relatively low priority for intermediary marketing teams because it doesn't immediately translate into an increase in assets under management.

Branding, however, doesn't always demand substantial resources, Zarker found. All it takes to streamline a product line and tell a client a more straightforward story is to consolidate redundancies, reduce or realign sub-brand name usage and clarify product positioning.

One of the most effective branding tools is a tagline that's concise, direct and memorable. Zarker points to American Funds and Affiliated Managers Group as organizations that effectively marry great taglines with their investment philosophy rhetoric.

"If you're a broad-based asset manager and you have expertise in a lot of areas - qualitative and quantitative research, mutual funds, hedge funds and so on - you have to have a broad tagline without being too general," Zarker explained.

"American Funds' uses the tagline, The Right Choice for the Long Term,' and they are always talking about consistency and long-term investing, so the tagline aligns with their marketing message," she said.

Chuck Freadhoff, a spokesman for the $714 billion money manager in Santa Ana, Calif., said the tagline was developed in-house about five years ago.

"It encapsulates our investment philosophy and, since we don't do any direct advertising and sell only through advisers, it reinforces the role of the adviser in long-term investing." Freadhoff said.

AMG's tagline, "Access to Excellence," works well, Zarker said, because it supports their company's structure, which is to find the very best manager, whether affiliated or unaffiliated with the $133 billion investment manager, for its clients.

Despite the effectiveness and relatively low cost of developing and maintaining a good tagline, nearly half of all intermediary marketers still say marketing literature is their No. 1 tool. Going forward, however, marketers told Zarker that branding will take on greater emphasis. So, too, will product positioning, as performance continues to be the key differentiator in the financial services marketplace.

When it comes to positioning a badly performing product or a product that is mired in a badly performing sector, Zarker said, it's important that intermediary marketers "be up front" about that reality with their advisers; but also that they return to two themes: that "the industry loves to chase a hot product" at the expense of other products, and "the natural cyclicality of the marketplace."

If a tarnished image is hindering performance, Zarker offered, intermediary marketers must convey to advisers and investors alike exactly what is being done to fix the problem. She cites Putnam Investments, which suffered brutally through the mutual fund scandal. The Boston-based firm recently launched a series of youth financial literacy workshops, which accomplishes two things. First, it casts the money manager's image in a philanthropic light among its peers and investors and introduces its brand name to young people who may not be aware of the scandal.

As to who to include in the marketing team, Zarker recommends involving all elements of the asset manager to create an effective marketing message.

"Each asset manager is different, so we can't say exactly how many people you need in your marketing organization," said Zarker, whose analysis included the cooperation of 40 asset management executives within intermediary marketing and sales organizations. "Some smaller asset managers with just three or four people on the marketing team work effectively, and others have 20 people." By contrast, some of the larger, global financial services organizations reported surprisingly Spartan intermediary marketing teams.

The study does indicate, however, that most intermediary marketing groups have more than 20, but less than 50, full-time employees.

In the end, Zarker said, asset managers must treat intermediary marketing groups as a key element of the organization when formulating business plans, instead of as an addendum.

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