The rules of marketing have changed in the mutual fund industry, and mutual fund shops are making at least three mistakes in this new world, according to Ruth Papazian
, former LPL Financial executive vice president and chief marketing officer.
These mistakes are: trying-to-be everything to everyone; not committing to branding campaigns; and not embracing the Internet. And getting these things wrong can be fatal for a fund firm, says Papazian.
"On the asset management side, the number one issue is shelf space, and there is such an open architecture out there." she says. "Advisors can really pick and choose any investment firm they want."
Papazian should know; she worked as chief marketing officer for LPL for over four years. She left her job last year to move back to Boston due to a death in the family. She now runs her own firm, Papazian Consulting
, which advises asset managers and broker-dealers in the art of marketing themselves in the new financial world order. And the three issues above are amongst the hardest for firms to work out, she says.
The first lesson she tries to get across to her clients is this: stop being a generalist.
"You have to really step back and define your markets," she says. "Trying to be everything to everyone just isn't going to work anymore."
That means fundsters have to make some tough choices and decide what they are really good at, and then commit to these things.
Many firms are not good at committing, she says, in particular when it comes to their branding. Too often a firm will launch a brand or marketing campaign and just stick to it for a year or so, and then change campaigns. That's a waste of money, she says.
"If you are going to do a branding campaign for just two years, you'd be better off just taking the money you were going to spend on the campaign, and throwing it out the window," she says. "It would be less painful."
A key element to developing a unique brand nowadays is getting Internet-savvy, she said. Developing customizable websites, getting comfortable with social media and emails. These vehicles allow firms to develop messages that are spot-on for particular target audiences, she says.
"I'm a huge fan of one-to-one marketing, of leveraging technology," she says. "But a lot of firms are not there yet."
Firms have to be smart in these ways now because they don't have the cash for the big broad campaigns of yesteryear, if they ever worked, she says. Firms have to make do with much smaller wholesaling forces and squeeze out as much return on investment as they can for their marketing dollars.
They also have to listen better to their target audiences. For example, asset managers need to appreciate the headaches of distributors and broker-dealers. Many of these platforms can't attract advisors by slashing fees and other costs, so they try to lure these financial professionals by giving them what they want. Advisors, she says, are looking for exceptional compliance reporting and needs-based products customized exactly to what their clients are asking for.
"Not everybody can attract advisors with huge payouts anymore," she says. "So distributors have to work really hard to develop value propositions for advisors."
These strategies, she says, have special relevance for firms scrambling to get big in the alternatives space. Because most of these alt funds are still very young, mostly under the three-year minimum for model portfolios, and still rather small, usually between $30 to $50 million, sponsors of these funds have to work harder to get second glances from distributors.
"It all boils down to the messaging — it's a really competitive world out there now," Papazian says. "You have to understand what moves, what worries, these clients to get new business."
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