Unlocking Real Value Blog

Does Rebound Change Marketing Strategy?

Published in Ignites – An Information Service of Money-Media, a Financial Times Company

Written by Andy Klausner, CIMA, CIS, the founder of AK Advisory Partners LLC., a strategic consultancy serving the wealth management industry.

It’s safe to say that most investment managers are certainly feeling better than they were a year ago, as are clients. However, it would be a mistake for firms to emphasize short-term performance over other longer-term changes that they have made in reaction to the financial crisis. I say this for a number of reasons:

• While markets have rebounded, most investors are still down close to 20% from the bull market peak. Happiness is a relative term. Therefore, it’s easy to understand why investors won’t be thrilled with performance that’s still a shadow of fourth quarter 2007 highs.

• Investors are focused on whom they do business with. That means they are interested to know in more detail why a manager performed the way it did and if such performance is repeatable. Investors have also educated themselves as a result of the financial crisis. They will be asking questions that go above and beyond performance. Managers that revise their marketing strategy to focus on the recent positive returns can come off as out-of-touch within this context. But a successful manager will proactively anticipate these questions rather than sit back and see if the client asks them.

• With all of the negative news about the industry over the past year — and certainly in light of the Goldman Sachs news — investors are focused more on issues such as transparency and disclosure. If managers are reevaluating their marketing strategy today, I would encourage them to keep those two latter themes in mind.

• Consider how the growth of social media has impacted the market over past several years. Investors are looking for partners who will address their particular concerns and ask the right questions  — a true partnership. Managers should be pushing out information to clients rather than trying to pull clients in, as was common in the past. This information must be about more than just performance. It has to add value to the client’s business.

Now, I am not saying that performance is not important. Certainly managers have to demonstrate how they have done in relation to their peers and benchmarks. But in today’s world, while this performance is the requisite to remain competitive, it’s not the overriding factor that investors are focused on. After all, there are literally hundreds of good managers out there today to choose from.

What differentiates one manager from another is the ability to add value above and beyond performance, and then to be able to clearly articulate that value to clients and prospects. They also must demonstrate that their organization is solid and has adapted successfully to the events of the past 18 months, and that they are interested in being a true partner with their clients. These are goals to which marketing efforts should be geared.

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