from the February 2008 issue of Emerging
Manager Focus e-magazine
Click
here for a PDF of the
article (a text copy appears below)
Brand
Or Commodity: Which Will Your Firm Be?
by
Bruce Frumerman, president, Frumerman & Nemeth Inc.
As a money manager your ability to survive and thrive is as
dependent on your capability to get people to buy into your
product as it is on your ability to deliver acceptable
performance.
You face a marketing challenge: Will you take the action
needed to turn your firm into a Brand or will you allow it to
be thought of as a Commodity?
The typical money management firm is only known for two
things: the pigeonhole category its product is in, whether
it’s correctly classified or not; and its most recent
performance. These firms are perceived to be no more than
commodities, and you don’t want to be one of them.
What enables one money manager to grow and retain assets while
a competitor can’t?
Is performance the sole answer? Of course not. If that were so
there would be but a fraction of the number of money
management firms there are. While performance is a significant
ingredient in the formula for success in attracting assets, it
is just part of the equation.
Is access to distribution channels the key to success?
That’s important, too, but just because a money management
firm’s products are available through a distribution channel
doesn’t make demand pull exist for those products or mean
that the channel is proactively soliciting for investors in
the firm’s products.
Marketing is the other major factor that impacts a money
management firm’s ability to grow and retain assets.
Marketing does more than “get the word out”. It’s what
gives a firm its identity and positions it in the eyes of the
marketplace of investors, advisors and the media. When
marketing is given short shrift by a money management firm,
its ability to attract and retain assets suffers.
Two parts to your marketing
There are two parts to marketing: sales marketing and
communications marketing. Sales marketing is about the process
of selling to prospects and their advisors. A salesperson or
team, whether in-house, third-party marketers or
broker/advisors, is identifying prospects, making contact,
giving face-to-face presentations and managing follow up
throughout the selling cycle for turning prospects into
investors. But what is it that the target audiences are told?
That’s communications marketing.
While good communications marketing can’t help improve your
investment performance, it can help you have higher
impact selling.
What does a firm’s communications marketing consist of? The
storylines and language it uses in its verbal and written
contacts with clients, prospects and those who influence them.
Communications marketing is what is used to get people to buy
into the investment products the firm is selling and the
process it uses to manage money. This includes everything from
sales presentations and brochures, to letters to investors, to
interactions with the press.
How
good is your firm’s storyline?
How good is your firm’s storyline for convincing people
about the validity of your investment process and the
intellectual acumen of management? (Keep in mind that the main
thing you are selling is brain power.)
Different firms face different challenges when it comes to how
to best tell their story. However, the most common
communications marketing error I see is telling an incomplete
story.
While all money management firms say something about
performance, portfolio and people at the firm, most of them
underemphasize, don’t explain clearly, or leave out,
explanation about place and process.
Place is the context in which the investment should be
viewed, shaping people’s perceptions about the roll or
function the allocation could play within their total
portfolios. Process addresses how you invest.
I’m sometimes asked, what if you’re a start-up firm with
no track record, what then? All the more reason to have a
good, and consistent, explanation about investment process, I
respond.
How you invest is the primary thing you’re selling!
As a High Net Worth institutional investor was quoted as
saying in the financial trade press, “I am not going to
buy a track record. I want to buy an investment process.”
When prospects and those who influence them can talk about how
your firm invests, you have a brand identity. So, your firm
needs a great storyline if you’re going to beat out
competitors who have similar performance.
There is a good reason why a storyline is so important. It’s
because a money management firm’s brand identity is not
based on a list of disparate facts. You never hear “That’s
the money manager with the R-Squared of this and the Alpha of
that.” Instead, people remember storylines.
So, you need to determine what should be your organization’s
buyer-focused key selling messages and the priority in which
these points should be presented in order to communicate a
linear storyline.
This is easier said than done, however. While money managers
are experienced in analyzing securities — something
they’ve done time and again — most lack the experience and
perspective to be able to reexamine their firm with the eyes
of their ultimate target outsider: the interested and
experienced but skeptical prospect. What about at your firm?
This requires more than just a cursory think and jotting down
whatever first comes to mind. Think instead about what makes
your firm different from the competing managers out there.
Don’t sell yourself short by just telling about your past
performance numbers. Instead, think of how you got there, the
decisions that you made, and the discipline that was followed
and let your unique narrative emerge.
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