“The financial crisis helped to level the asset management playing field, creating opportunities for different firms to capture a larger share of industry long-term mutual fund net flows,” Cerulli states in its June 2010 Cerulli Edge: Asset Management Edition. Cerulli notes that firms have tailored brand messages to this particular situation, hoping to attract the attention of advisers and investors who are proceeding with caution unsure whether the economic environment will continue to improve.
While wholesalers cite firm reputation (among advisers), performance, and their own consultative and knowledgeable wholesaling as the most important reasons advisers do business with them, more than a quarter (27%) cited brand recognition. “It is apparent that some advisers are more comfortable placing their clients’ assets with firms with which they are familiar,” Cerulli says.
In a 2009 survey, 80% of asset managers believed brand would be more important in the retail intermediary marketplace, a considerable increase from 36% in 2007 and 60% in 2008. When Cerulli asked asset management product professionals about their brand, specifically in relation to their product strategy, more than 70% stated that a lack of brand presents a challenge to the implementation of their product strategy.
Also changed is the method of delivery, Cerulli found. Digital media, which firms turned to during times of cost-cutting, has become a mainstay of mutual fund marketing.
Online advertising is becoming the preferred method of advertising, for its reasonable cost, wide reach, and because its effectiveness is easily measurable. In June 2009, when asset managers were working with flat or decreased budgets, 57% of firms expected to increase their advertising through the Internet.
Cerulli also expects Internet advertising will become more heavily used and firms will begin to dabble with social media. “Social networking sites like Twitter have the potential to increase brand awareness, but marketing departments will need to carefully consider compliance issues,” Cerulli says.
Not only are firms increasing their advertising in the digital arena, but they are also building teams around these efforts.
“A recognizable brand with a message that resonates with advisers and investors may well be the difference in attaining a greater level of success,” Cerulli concludes.
The Cerulli Edge: Asset Management Edition for June 2010 also discuss value-added programs asset managers develop to build deeper relationships with financial advisers and distinguish themselves beyond their product line. There exists a market for these materials as broker/dealers have made cuts to their adviser support structures. Cerulli contends that asset managers must consider these educational and business development materials to be extensions of their brand and a way to reflect their unique intellectual capital.
In addition, the report notes that although variable annuities have long been derided by critics for their high expenses and complexity, in today’s post-crisis environment, investors and advisers may find the protection features associated with VAs appealing—especially as investors explore moving their assets out of cash and short-term fixed income. The health and perception of the VA industry should be of particular interest to asset managers as it remains a way for these firms to benefit from retirement-income-seeking clients via subadvisory relationships.To obtain a copy of the report, email CAmarketing@cerulli.com.