Active managers: it’s time to pack up and go home, right? Industry forces of fee compression have driven monumental amounts of fund flows to passive investing strategies. Coming out of the dot-com bust, an investor evaluating a fund checked its Morningstar rating first. Today, it’s all about the expense ratio, a move from performance chasing to a race to the bottom in fees. Ouch.
For investment management firms pushing active management strategies — whether you are managing SMAs, mutual funds, ETFs, institutional portfolios or private accounts of individual investors — the need to separate yourself from the pack has never been more desperate. If you are going to charge a fee above a few basis points, you have to demonstrate your ability to deliver a unique market exposure, alpha above what your peers can muster and specific utility for investor needs.
Don’t give up yet. Articulating and differentiating your value with an active marketing strategy could save your business. Here’s how.
FOCUS ON INVESTOR OUTCOMES
When marketing your investment strategy, investors are no longer zeroed in on whether your fund or SMA fits into a particular style box as much as they are trying to solve for something in their portfolio.
The high cost of stock picking has made clients more passive, an analyst says.
This change in thinking is why we will see more mutual funds and ETFs marketed based on ideas like “low volatility” and “enhanced income” instead of terms like mid-cap value.
Investment managers and the financial advisors that deploy their strategies have the same need: deliver investments that speak to the needs and concerns of the end-user investor.
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Consider customer referrals, a strong media presence and philanthropy.
April 17 -
These two platforms can help give your practice a boost.
April 18 - Honing in on ideal clients and increased AUM could be the payoff.
Because of this, it is incumbent upon investment firms to use their media relations programs and their content marketing to show the connection between the investment strategy and the needs those strategies aim to address.
GET PERSONAL
Don’t believe the robo hype, humans still want to deal with humans.
Yes, investors want low costs and high returns, but all else being equal, they want to know you. The one skill robots will never replicate is our ability to apply judgement and experience in the many gray areas that arise throughout the lifecycle of a portfolio. Hold onto this advantage with a white-knuckle grip by leveraging the countless channels available to attach a face to your name, demonstrate your personality, and showcase your investment acumen.
DON’T FAIL TO COMMUNICATE
The media landscape is far more fragmented today than when passive investing first started rising in popularity. Investors are bombarded with information from a litany of sources and are connecting with influencers on an ever-expanding list of social media platforms.
When marketing your investment strategy, investors are no longer zeroed in on whether your fund or SMA fits into a particular style box as much as they are trying to solve for something in their portfolio.
At any given moment, you can find Josh Brown on CNBC, popping up on the blogosphere, or even retweeting memes to his 800,000 Twitter followers. He didn’t become the most visible man in finance by sticking to one avenue; he did it by simultaneously juggling media interviews, TV appearances, blog posts compositions, and industry conference speeches, all while maintaining the loudest voice on the top of social media mountain.
Successfully reaching your target demographic requires an omnipresent approach. Don’t ignore any channel, no matter how small it may seem.
HUSTLE 24/7, 365
You can’t sit back and take the summer off. That’s when your target investors actually have the most time to rethink their investment decisions and asset allocations. Investment management firms must utilize these lulls as an opportunity to trumpet their messages and increase their visibility to sway those on the fence into taking action.
However, don’t think a cheap, superficial holiday-themed marketing ploy will be enough to convince savvy investors to trust you with their precious capital.
BANG THAT DRUM
Active managers tend to go into hibernation when their investment thesis falls out of favor. But if you really believe in the long-term efficacy of your strategy, you must continue to bang that drum, through thick and thin, no matter what. Take the opportunities to make your case and keep the public awareness of your strategy alive.
