Emerging, newer, and smaller asset managers – those with less that $500 million in assets under management – often have difficulty getting noticed by registered investment advisors, broker/dealers, high net worth individuals, and the financial press.
The realities of raising assets for “sub-institutional funds” – whether hedge funds or mutual funds – are fairly stark. According to Bryan K. Johnson, Managing Partner of Johnson & Company, an investment consulting firm in Austin, TX:
89% of all hedge funds fail to reach $100 million in assets under management (AUM)
76% of hedge funds ‘tap out” their network of investors within one year
50% of the hedge funds that closed had AUM less than $49 million.
But here’s the kicker, according to Mr. Johnson: 81% of all hedge funds have no marketing plan. And 61% of hedge funds with AUM of less than $100 million have no marketing at all.
So, what to do?
First and foremost, building assets for new and/or undiscovered mutual funds and hedge funds is about building relationships.
“While distinct differences exist in marketing and raising assets for smaller or larger funds, a fundamental similarity is the basic need for personal engagement and relationships in the pursuit of assets and allocations,” Mr. Johnson said. “Face-to-face meetings with the right investors and intermediaries are when the right relationships actually begin and ultimately where allocations are won or lost.”
Do your prospective clients know you? “Knowing an investor or intermediary on an in-depth level and enabling them get to know the fund holistically so that mutual trust and confidence are created is crucial to achieve a level of conviction about the allocation decision, said Mr. Johnson. “This is the foundation and catalyst for organic and acquisitive AUM growth.”
Relationship marketing takes time, of course. “It relies on standout inter-personal skills, excellent data and analytics and a sturdy technology platform,” Bryan said. “For those that practice it as opposed to paying it lip service, it serves as a point of competitive differentiation.”
2. Public Relations
“Public relations helps with sales in a number of ways, including increased brand visibility, brand awareness, and establishing or increasing your credibility, thought leadership and third party endorsements,” said Dan Sondhelm, Vice President of SunStar Strategic, a financial services public relations firm in Alexandria, Virginia.
“Think of PR as a form of advertising or marketing, but instead of you thumping your own chest, it’s often someone else doing it for you, said Mr. Sondhelm. “PR can also help you get some much-needed recognition for your great product or service in a cost effective manner on a national level. You may have the best mutual fund or SMA strategy in the country, but who will invest in it if nobody knows about it? PR helps you get the word out.”
However, the media strategy of many investment managers has been to simply say “No comment.”
Prior to the JOBS Act of 2014, many press-shy hedge fund managers, undiscovered or not, preferred to be undiscovered by the media, but known only to high net worth individuals, family offices, and advisors. Why? Concerns regarding compliance disclosure – that if too much or too little were disclosed in any public communication – a regulatory investigation would be triggered.
However, the press is hungry for real time opinions of investment managers. With proper vetting by your legal and compliance people, you may be able to provide the media with comments on current market conditions, trends in industry hiring and firing, and prospects for the industry as a whole.
Investment managers of smaller and start-up mutual fund firms have been equally press shy. Not for fear of starting a compliance audit, but simply because they didn’t know what to say, or how to say it.
That’s where media training can be critically important. An expert public relations partner can help asset managers with customized media and communications training workshops, and coaching in crafting clear, repeatable, and concise statements that seek to engage and inform prospective investors and reporters.
Let’s say you get quoted or on air. Congratulations! You’re not done yet. Put the video or PDF on your website; include it in your bio; email it out to clients and prospects; make a poster of it for your lobby. (As for social media, discussed below, tweet it on Titter; post in Facebook, and mention it on Google+ and LinkedIn.)
3. Social Media
“Social media is a great way to communicate with your investors and industry colleagues, said Mr. Sondhelm. “Twitter and LinkedIn provide appropriate spaces to distribute marketing materials and thought leadership while communicating directly with those involved in the financial services industry. It is important, though, to manage and maintain your social media spaces carefully.
“An empty LinkedIn or Twitter page with no interactions from your mutual fund firm will misrepresent your engagement and commitment to service,” Dan said. “By monitoring your social media platforms carefully and using them to post fresh content on a regular basis, social media can become an effective part of your mutual fund marketing strategy.”
The first problem that many asset managers have when thinking about starting a social media presence is that they don’t know who they should be talking to. So ask: What is your perfect client’s persona …their age range, income, education, interests, preferred methods of communication, pain points, objectives?
Don’t expect immediate results. Create an editorial calendar, and post consistently. Each platform has unique best practices; with Twitter, for example, managers may want to tweet three to five times daily, while once daily for Facebook might be more than enough. Judicious use of LinkedIn, Facebook, Twitter, or Google+ (or a combination) may over time help undiscovered firms gain traction and visibility, and build a reputation as an industry leader.
Some start up and sub-institutional-sized funds don’t have a website. Think you are a credible firm without a website? Perhaps you should think again. A website can establish trustworthiness, honesty, dependability, and build relationships, customer loyalty, and search engine visibility. And it may create leads.
Your website and its mobile version can be a hub for all incoming leads, and a magnet for potential new investors. Blogs, landing pages, and calls to action can help create leads, too, as prospects search for information. If you have relevant and abundant content on the web, they are more likely to find you than if you have no web provenance.
We get it, most hedge fund firms don’t have blogs, at least not yet.
If you are an undiscovered hedge fund or mutual fund, however, an informative, consistent, compliance-approved, perhaps twice weekly blog may help the process of getting discovered.
Spread the writing around. For example, your Chief Investment Officer could post about market movements and macroeconomics; your founder may write about the benefits of long-term investing; and your Chief Operating Officer could handle tax topics.
Blog about what’s important to your audience. Don’t blog about yourself, your products, or what you want to sell.
Speak at or at least attend industry conferences and networking events put on by Schwab, LPL, The Financial Planning Association, Hedgeopolis, Opalesque, your local hedge fund association, and other places in the industry where you will be heard not only by potential investors.
And what’s a good speech?
“A good speech should be like a woman’s skirt,” said Winston Churchill. “Long enough to cover the subject and short enough to create interest.”
To gain visibility, consider creating fresh content each week. What exactly is “content?” Content is useful, it solves a prospect’s problem, and it comes in the form of infographics, pitch books, flip books, fact sheets, case studies, eBooks, email campaigns, blog posts, brochures, videos, podcasts, FAQs, motion graphics, and more. Quality, not quantity is the number one factor.
Why content? According to a recent research report from Exact Target,“80% of business decision makers preferred to get information in a series of articles versus an advertisement.” More: 86% of B2B marketers used content marketing, according to the Content Marketing Institute’s 2015 B2B Content Marketing Benchmarks and Trends. And: content marketing is 62% less expensive than traditional marketing, said Demand Metric.
8. Press Briefings
For select managers, a press briefing may be a critical component of gaining visibility with the media, and ultimately, with preferred investors. Press briefings may give managers the opportunity to simultaneously tell 10 to 20 reporters about your thoughts on sectors, stocks, and the market.
“By promoting your new product to the media, you can get the word out about the fund and its strategy, attracting a wider variety of investors,” said Mr. Sondhelm. “Also, by talking about your mutual fund from its earliest stages, you firm will gain traction in the media. You will develop media contacts that will trust you for opinions on the markets, giving you even greater leverage to promote your mutual fund in the future.”
9. Third-Party Marketing
Third party marketers work with investment managers to improve their sales and marketing process and increase assets under management.
“The best firms specialize in matching clients with financial intermediaries – consultants, multi-managers, sub-advisory firms – and institutional investors, such as public and corporate pension funds, and endowments, said Steve Rubenstein, President of Arrow Partners in Purchase, New York. “3PM firms seek to accomplish this mission by developing an investment manager’s unique story, creating a marketing plan and sales materials, and managing the sales cycle from start to finish.”
If a good match, third party marketing firms can help mutual funds and hedge fund launch a new product, seed a start-up with critical assets, expand into new market segments, fix an ineffective distribution effort, grow an established product line with limited presence, and in general be an alternative to hiring internal sales people.
A cautionary note: “Only 1 out of every 275 sub-institutional level funds establishes a third party marketing relationship,” according to Bryan Johnson. The selection process can be, well, quite selective.
Arrow Partners, for example, has a 31-point selection checklist to determine if an asset manager may be a good match for an outsourced sales platform. Among the criteria are: does the manager have a distinct story? An investment pedigree? A competitive advantage? Scalability? Assets under management? Performance history? Drawdown history? Ownership? Culture? Reputation? Financial strength?
Don’t know enough yet about how inbound marketing can help emerging and undiscovered investment managers increase assets under management? Here’s a no-charge primer quiz, takes about 10 minutes: