Active Managers Need More Than Just Free Giveaways to Build Their Brand, Increase AUM

Musings from Morningstar Conference

Last week, I attended the Morningstar Conference in Chicago where dozens of asset management firms were lined up booth-by-booth waiting for advisors and other attendees to walk up to their tables and inquire about their funds.

That meant the competition for displaying the most creative and conversation-inducing free swag was in full force. What better way to entice attendees to step up and say ‘hello’ than to give away branded pens, water bottles, coasters, portable phone chargers, notebooks, stuffed animals, mints, and—one of my favorites—an Oreo cookie with a candy-coated fund ticker displayed on top? Tote bags were handy because how else could visitors collect and stash all those goodies (and of course, take the one-page fund fact sheets: the purported reason for their attendance at the conference)?

However, despite the creativity on display, many of the firms haven’t turned to the most critical tool for establishing and maintaining long-term brand recognition: a strategic PR and media relations campaign. Yes, I am naturally biased towards public relations, but I firmly believe that next to word-of-mouth there is no stronger or more convincing marketing tool than earned media.

Fund companies, especially those that deploy actively-managed strategies, have to create memorable buzz that people will act on, because let’s face it, if the race for increased fund awareness and AUM growth wasn’t competitive enough, managers now have to deal with the prominent and inexorable rise of passively managed index funds.

Low-cost passive funds are increasingly making their way into retirement portfolios (among other accounts), forcing active managers to do whatever they can to stand out and convince investors why their funds are poised to outperform the indices in both bull and bear markets.

Over the course of my three days at the conference, I walked around the exhibit hall identifying the firms with which I wasn’t that familiar or hadn’t seen in the media, particularly on television. In addition to the large fund companies like JPMorgan and PIMCO, I came across a fair number of companies with only one or two available funds; for example, a flagship Overseas Value or Arbitrage Credit Opportunities Fund. Often, when I asked if they had appeared on the financial broadcast networks to promote the funds and their investment theses, the common response was they’ve done some “here and there” or that they strategically wanted to stay out of the press. That’s obviously a big mistake for fund companies targeting large retail investors.

When the conference was finished and the freebies were put away, I wondered how these actively-managed firms were going to attract investor interest, distinguish themselves from their competitors and justify their place in portfolios—especially given the boon in passive investments. The need to drive brand awareness and communicate distinguishing selling points is the core reason why PR matters.

What many of these firms don’t understand, or choose not to recognize, is that PR remains a critical component to any sales and marketing effort, especially for those with relatively small direct sales forces or that rely on wholesalers.

Handing out freebies to initiate that first conversation and keep the firm top-of-mind for the lifespan of a conference is a good start, but it isn’t enough and can’t stop there. Constant reinforcement of a company’s messages and building and enhancing brand credibility through media relations are critical components to gaining an edge over the competition and distinguishing a company’s strategies from passive investing—and providing attendees even more reason to seek out a particular booth at the next conference.

Zach Leibowitz
Executive Vice President


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