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Reassess Marketing, Pitch Positive Stories

With investors moving so much money into cash and cash-equivalent instruments to avoid the continually downward spiraling stock market, it has never been more important in the history of modern investing for mutual fund companies to reach advisers and investors with forceful yet honest messages about the value of long-term investing and areas of the market that are safe, outpacing benchmarks or, perchance, even delivering positive returns.

That was the overriding message in the "Survive and Thrive in a Changing Market" webinar conducted last Wednesday by the National Investment Company Service Association.

Fund company marketing and advertising departments can get such messages out about their product and investment philosophy strengths without expanding their budgets by, first, simply conducting an audit, in conjunction with their sales team, of all of their communications efforts to find out what is working, what is not and how their marketing strategies could best revolve around their most successful products.

Executives should also take a close look at sales trends and Internet traffic patterns. This, paired with actively pitching positive market stories to the press, as told by portfolio managers, is the smartest course of action right now, said marketing experts John Drachman, principal with Drachman Group, and Dan Sondhelm, a partner with SunStar.

"There is a lot of money in motion as a result of the market uncertainty," Sondhelm said. "From the perspective of your own firm, that's risk, but as far as your competitors are concerned, that's a tremendous opportunity. At Wachovia, calls are up 30%. Visits to financial news sites in September rose 30% to 64.3 million unique views. Investors overwhelmingly want to know what the industry is saying. It is more important than ever to communicate with investors," Sondhelm said.

"Money managers need to promise that better times lay ahead," Drachman added.

Old Mutual recently conducted a thorough communications audit of 800 pieces of literature to judge the configuration of each, find out if there was any duplication and if any information was missing. As a result of a communications audit, Lincoln Financial recently reorganized its messages into three areas: creating wealth, protecting wealth and enjoying wealth.

"Make your websites more solutions-oriented, instead of like a 'Home Depot' product track, where equity and fixed income can be found in certain aisles," Drachman said.

"On a smaller scale, there is nothing that prevents you from bringing material into a conference room and examining your communications," Drachman said. "Bring in salespeople and ask yourselves honestly, what is working, what is not, are there any buried nuggets and how can the message be told more creatively. It is very difficult to know what is working right now if there hasn't been an outreach to sales."

Along the lines of cooperation between marketing and sales, there also needs to be more cohesion and leveraging between print and web messages. Because Internet activity is usually run by IT, those people need to be included in marketing meetings, as well.

That said, don't permit hard sales or territory quotas to overwhelm the creative process, Drachman continued. "We can't forget that marketing is about creativity, trying to express asset allocation in a fresh way that can connect with the investor and give them a new sense of what asset allocation can represent," he said.

Advisers are hungering for fact sheets and sales presentations that specifically address how investors can weather the market downturn, the two presenters said. "More and more, we are seeing business development campaigns that integrate investment and sales themes very intuitively," Drachman said.

With advertising budgets so tight, many firms are relying on e-mails to advisers, specifically "Russian doll" e-mail programs that contain embedded sales and educational messages or pdf that advisers can, in turn, pass along to investors.

Likewise, many firms are taking a new approach to shareholder reports and prospectuses and making them look fresher, more like true glossy sales and marketing materials, complete with photographs and illustrations touching on newsworthy topics, such as the election and energy concerns. Herein, fund companies are also increasingly turning to data-streaming technology that permits them to update performance figures up to the minute in their sales literature to tell a more convincing story.

As advertising budgets continue to be pared down, fund companies are more likely to require their portfolio managers to make themselves available to the press. While it takes a great deal of time away from managing money, there is a tremendous upside to reprintable, credible news stories that prove "your portfolio manager is steering the ship during difficult times," Sondhelm said. And financial journalists and editors are especially keen to write detailed stories about positive pockets of the market or unusual approaches to investment because their readers are hungering for this information, he said.