Fund company marketing brochures miss sweet spots

Financial advisers focus only on sales brochures and fund information that is germane to their financial practices; otherwise, marketing efforts fail to attract their attention, even momentarily, according to a soon-to-be released report. But that indifference won't stop executives at fund companies from demanding more from their marketers over the next five years, despite minimal budgets and limited training, according to an executive summary of the report from Financial Research Corp. in Boston that was provided to InvestmentNews. "From our research, we have learned that status quo marketing communications alone is no longer sufficient," said Dave Swanson, a co-author of the report.
Advisers dislike generic marketing materials, but they crave innovative resources such as blogs, webcasts and other interactive offerings, said Mr. Swanson, managing principal at Naperville, Ill.-based SwanDog Strategic Marketing LLC. "As you look at a lot of these marketing materials over the years, some of these haven't changed," he said. But others, such as Greg Zandlo, president of North East Asset Management Inc. in Coon Rapids, Minn., have noticed an improvement in marketing materials. He likes Internet materials — particularly monthly newsletters — pinpointing industry trends that affect advisers. "Because time is so fractured, you need the multiple reinforcements of different marketing materials that catch your eye," Mr. Zandlo said. He reads newsletters from Op-penheimerFunds Inc. of New York and Pacific Investment Management Co. of Newport Beach, Calif. The key to gaining the interest of advisers is providing them with relevant information, said Terrence Morgan, president of Ok401k Inc. in Oklahoma City, Okla. "I'll throw out the stuff about the funds that [doesn't] interest me," he said. But "[there are] some very impressive marketing people who are doing some pretty impressive stuff," Mr. Morgan added. Twice a week when he isn't meeting with clients, he takes all his sales brochures and fund prospectuses with him to read at lunch. "I laugh at all of my peers who complain about the marketing materials," Mr. Morgan said. "I think it's a great service." More than 100 mutual fund companies responded to FRC's spring online survey about their firm's marketing efforts. The survey showed that smaller firms tend to employ generalist marketing representatives, while larger firms often employ marketing specialists. FRC based its report on the survey as well as on informal interviews it conducted with advisers. Fully 73% of firms with $15 billion to $50 billion in assets under management rated their own marketing as below average or worse, according to the study. Moreover, the analysis indicated that 46% of these firms spent less than $2 million annually on marketing. The strongest ratings of marketing effectiveness were found among firms with $50 billion in assets or more, though 50% of them spent less than $10 million on marketing. Many fund companies lack leadership in the marketing department, with just 55% of survey respondents saying that their firms had a chief marketing officer. Moreover, heads of marketing were typically not on the executive committees of their firms. And members of the marketing department may meet with advisers only once or twice a year — perhaps not enough time to get a good feel for the market. Marketers need to beef up their efforts by working on capturing, cultivating and analyzing client data to provide strategic direction, Mr. Swanson said. Also, marketers need to serve as client advocates and not defer that responsibility to the sales force. Retail and institutional marketing needs to be consolidated, with analysis showing that blending the two sides makes the most sense, he said. Above all, marketers should realize that advisers, for the most part, don't want any more literature. "At least 30% of all of the material created out there is discarded," Mr. Swanson said. Lisa Shidler can be reached at lshidler@crain.com.