As one of the thousands of money management firms in the marketplace you face a significant marketing challenge. Will you turn your firm into a brand or allow it to be thought of as a commodity?
Known only by the investment style pigeon-hole in which the marketplace fits its products and by its recent performance, the typical money management firm is perceived to be no more than a commodity. Such firms live and die on their numbers alone. Few money management firms are known for what should be the core element of their firm’s brand identity: how they invest. Those who are have a marketing advantage over their competition.
Marketing is a major factor that impacts a portfolio manager’s ability to grow and retain assets. Marketing plays a key role in determining a firm’s identity and in positioning it before the eyes of investors and advisors. When marketing is marginalized by a money management firm, its ability to attract and retain assets suffers.
What Sophisticated Investors Are Telling Money Managers
Attend a family office investor conference or two and listen to what investors are telling money managers that, in addition to a good performance track record, they need from them. Comments I have heard include:
- A fund of funds manager says he won’t invest if the money management firm’s portfolio manager cannot clearly explain his strategy.
A family office CIO tells an audience of hedge fund managers that if the head of the family doesn’t understand how a fund invests well enough to repeat its story to friend while they’re out golfing, he won’t invest.
A seeder investor, who says he looks for a money manager to be able to demonstrate that she is capable of running the business and not just running the fund, demands there be a well thought out marketing plan and a cogent explanation of the investment strategy.
An angel investor says effectively talking the story in a presentation meeting is now more important than ever; a hedge fund firm better know its story inside out.
Is your money management firm giving prospective investors all of the information they want for deciding whether or not they believe it is a defensible decision to invest with you?
Strengthening Your Firm’s Investment Story
For your money management firm to strengthen its storyline, your management team needs to ask itself these questions:
1. What should be our firm’s key selling messages for educating and persuading people to understand and buy into how we invest?2. How can we best structure our storyline so that it’s based on buyer-focused rather than seller-focused points? 3. In what priority should we present our key selling messages in order to communicate a linear storyline that people can recall and repeat to a colleague or advisor? 4. How should we position our fund in the investment marketplace in general as well as in contrast to our recognized competitors? 5. Which parts of our investment process are we willing to make transparent, which elements will we not reveal and how can we best describe a process that has some hidden steps? 6. What sales language should we use, with consistency, in our verbal and written sales presentations, our marketing materials and other content we may disseminate related to how we think? Of course you can’t answer these questions effectively without having an outsider’s view. It is important that you know how the skeptical, cynical sophisticated investor prospect would view your responses. If you start marketing without having this knowledge and perspective, you may burn some contacts on your list of people to pitch. Post-2008, sophisticated investors no longer allow a money management firm a ‘do-over’ in pitching them. You want to get this right the first time.
# # #