Fund industry marketing RIP

It’s no secret that the fund industry is having a bad time. Yes, profit margins remain high, but that’s largely down to rising stock markets and, consequently, assets under management. The industry faces huge underlying challenges — principally tighter regulation, the growth of low-cost indexing and, most serious of all, increasing scepticism about the value of active asset management.

As anyone who’s read my blog, The Evidence-Based Investor, will know, I’m not a fan, generally, of active funds, and I expect huge disruption in this sector in the coming years. Firms will certainly have to reduce their fees and charges considerably. But they’ll also need to make sweeping changes elsewhere — not least in the marketing department.

The fund industry was largely built on marketing. The better at marketing companies were, and the more resources they devoted to it, the higher the inflows of investor assets were. But times are changing, and fund house marketers who don’t change with them will be left behind.


Across all sectors of the economy, what consumers are demanding more and more of is authenticity. They’re attracted to brands that are what they say they are, that are honest with themselves and their customers, that are open and transparent, and, most of all, that inspire trust.
Interestingly, those are precisely the qualities that many people feel the fund industry lacks. So, what’s the answer for fund house marketers?

Out with the old

First, they need to take a cold, hard look at the marketing methods they’ve used in the past, and either dispense with them altogether, or at least learn to rely on them very much less in the future. Here are some examples.

We’re seeing a secular shift towards basing investment decisions on rigorous, independent, academic evidence. In this new environment, simply repeating the same old myths about active management will no longer do. Net of costs, only a tiny proportion of active managers outperform the market over the longer term, and they’re very difficult to identify in advance; let’s stop pretending otherwise.

Cherry-picking funds
Fund marketers are very selective about the funds they promote, and they choose their moments carefully. They typically plug a particular fund after just two or three years of strong performance, which is often the very worst time to buy into a fund. Fundamentally, this sort of marketing is dishonest, and it preys on investors’ behavioural biases and lack of understanding.

Dissing passive
Many firms have taken the view that the best form of defence against passive investing is attack. Indexing stands accused, among other things, of causing bubbles and distorting markets, and it has even been likened to Marxism. Again, the evidence behind these sorts of scare stories doesn’t stack up. Project Fear isn’t working.

Jollies for journalists
For years now, fund managers have offered journalists all manner of “jollies”, from helicopter tours of New York and Hong Kong, to safaris in South Africa, and from meals at top restaurants to tickets for concerts and sporting events. Apart from the fact that, in my experience, journalists are getting wise to these sorts of tactics, they’re totally inappropriate. The line between hospitality and inducement has become too blurred.

Adviser conferences
It’s also time to review sponsored adviser conferences. Of course, it’s important that fund management companies speak to financial advisers, but too many conferences are just thinly disguised sales events. Advisers should attend them to learn how better to serve their clients, not just for a liquid lunch and a bag full of freebies.

In with the new

So, those are the things that marketers should be doing less of. What should they do more of? Here are three suggestions.

1. Think and act like publishers
First and foremost, fund house marketers should stop seeing themselves primarily as marketers and develop a publishing mindset instead. Of course, a key aim of marketing is to attract and retain business, but marketers who focus on sales to the detriment of other things — building an audience, engagement and trust, for example — are missing the point. No, brand publishing, or content marketing, if you prefer to call it that, isn’t a quick fix; it’s a big, on-going commitment. But, over time, firms that provide regular, accessible content that people want to consume and share will reap the benefits.

2. Develop thought leadership
Fund management companies should also aspire to become thought leaders. They need to establish their expertise in areas that their customers and potential customers are genuinely interested in. A good example is sustainability. The data shows that investors of all ages increasingly want to invest in a way that makes the world a better place, and yet there are very few asset managers producing content about this hugely important subject.

3. Employ journalists
You might expect me, as a journalist, to say that fund houses should employ more journalists, but it’s true. And no, I’m not talking about journalists who fancy working in public relations. Journalists make good writers and story-tellers; our expertise is in explaining complex and sometimes dull subject matter in an engaging way. So, whatever kind of content you’re focusing on — the written word, video, infographics, audio, or a combination of those — journalists are the best people to produce it.

Traditional fund industry marketing is dead, or dying. The age of the fund manager-publisher has just begun.