February 2009

BRANDS: Lessons in Humility

Financial firms have seen their brands reduced to tatters. Instead of hiding, asset managers must be courageous and visible and communicate their brands’ financial solidity – without being flashy. By Fiona Rintoul   Though I speak with the tongues of men and of angels and have not charity, I am become as sounding brass, or a tinkling cymbal (I Corinthians, 13:1).

We don’t often resort to scripture at Funds Europe, but these are exceptional times, and this quotation seems particularly appropriate to the topic of brand. What, after all, is brand?

“The b-word is almost a taboo in investment management because people don’t understand it, and educated people resist the idea that you can be influenced by something that you stick on the side of cattle,” says Piers Currie, marketing director at Aberdeen Asset Management (AAM). “But if we use the c-word, by which we mean culture, then staff and competitors understand.”

Roger Miners, head of business development and client service at RCM, the active equity company within Allianz Global Investors, agrees that brand goes way beyond advertising and marketing.

“Ultimately, it’s how you exist in people’s heads, both internally and externally,” he says. “That’s culture. It’s about behaviour and values.”

For Bernard Del Rey, head of marketing at Morgan Stanley Investment Management (MSIM), brand is about how people experience you, whether they are clients, employees or prospects. An important part of that experience, particularly in asset management, where what is being sold is a future promise, is whether what you promise and how you deliver it are aligned.

Whatever brand is, everyone agrees that a company’s brand, or perhaps more correctly its culture, is more important than ever in the current chilly climate.

“It’s crucially important at a point like this and it will be crucially important through this,” says Miners.

That’s partly because people have stopped acting rationally (assuming they were acting rationally in the first place). There’s an emotional benefit to buying from a big brand, notes Del Rey, as well as the rational benefit associated with access to services and confidence that there is excellence. In a crisis, there are periods of time when people move along the rational/emotional continuum in the direction of emotional.

“There’s a bit of an emotional response,” says Del Rey. “You have to be prepared for that and anticipate clients’ needs in that respect. You have to provide more education and thoughtful insight than you did before.”

Preparation is key in another sense too. If you didn’t do the work going into this crisis, it’s probably now too late.

“In a crisis there is very little you can do to impact your position in the marketplace,” says Del Ray. “It’s what was done coming up to that crisis that matters.”

Having said that, a successful established image alone will not save you. “A big brand is not a guarantee of survival,” says Nuala Walsh, head of international marketing at BlackRock. “You can have the biggest brand on the planet, but if you can’t manage money and you don’t have the right risk management, it won’t save you.”

Even those firms whose brands have not been challenged by large losses or scandals have to reassess their position in the current climate. Brand capital may have been built pre-crisis, but to keep hold of it you need to react to what’s in front of you today in the right way.

“In 2009, firms need to stand back and try to assess where their brands stand,” says Del Rey. “Anything done pre-September ‘08 is probably out of date at this point.”

BlackRock is a case in point. On the evidence so far, BlackRock can manage money and does have the right risk management. In the current surreal environment of non-stop corporate explosions, BlackRock has remained unscathed. In fact, you could say BlackRock is sitting pretty.

BlackRock’s brand is solid as, well, a rock, and that fits the times. Sleek and sexy are most decidedly out, and sober and dependable are in. But does that mean Walsh and the firms’ other marketing gurus sleep easy at night or perhaps even indulge in a little karmatically suspect schadenfreude as flashier colleagues bite the dust? It does not.

No one is immune, says Walsh, and the greatest sin right now is arrogance. “We need to start by avoiding any arrogance whatsoever. We need to be humble. The whole way we are regulated is going to change. The whole landscape will be completely different.”

Anyone who doubts this can take a look at the Interbrand ‘Best Global Brands’ ranking for 2008. The list is an abject lesson in humility (see table) for the financial services sector. With the exception of Allianz and Amex (plus Visa which is a new entrant), all the financial services brands on the list are on a downward trend.
And these figures were published in September 2008 a week after Lehman Brothers collapsed and the global financial crisis got into full swing, meaning the calculations took place well before the rot truly set in. Many of the financial services names on the list have since been issued with a one-way ticket to oblivion or are, as we say in Scotland, in a wee bit of hot water.

There will be further deterioration in the value of financial services brands this year and less financial services brands in the 2009 Interbrand rankings, predicts Rune Gustafson, chief executive of Interbrand’s London office. “But that will probably also be true of the automotive sector,” he notes. “There are movements in sector confidence.”

Loss of trust
Movements in sector confidence there may be, but no sector has been quite as challenged as the financial services sector. As Walsh puts it: “The bond of trust has been broken. The emotional contract with all of the big brands has been broken.”

People had an implicit trust in financial services brands, agrees Gustafson, and that is now gone. People thought that banks, for example, were as safe as houses. They weren’t. Now there is not just distrust; there is public anger, particularly with those companies that have been bailed out by government and are thus seen to have ‘got away with it’.

We, of course, are not concerned with all of financial services, but only with asset management. The challenges to the asset management sector, on the long-only side at least, have been much less than those experienced in, for example, the banking sector.

Asset management businesses are now left with the task of distinguishing their industry from the rest of the financial services industry. In many cases, where companies are owned by banks or (sometime) investment banks, this dichotomy is mirrored in their corporate structure. How does an asset management firm ‘trapped’ within a banking parent promote its brand at the moment?

“No dissociation from the parent is possible,” says Del Rey. “What is important is that clients understand key things. Asset management services are segregated from any other services. It’s the client’s money, not the firm’s money. That is an important point to emphasise during this period of unique turmoil. That needs to be part of the regular conversation with clients.”

And there’s something else that is very important. “It needs to be true,” says Del Rey.

We are now in a spin-free zone. “There is no appetite whatsoever for any financial services company that is not completely upfront,” says Walsh.

Companies need to say what they do – a lot – but they also need to do what they say. “You can’t pretend you’re something you’re not,” says Currie. No tinkling cymbals or sounding brass. Charity, where charity means be real.

Honesty is the best policy
The task now for those companies that remain in business – “the survivors and the injured,” as Gustafson calls them – is to rebuild trust. Easy to say and very, very difficult to do. How do you do it? Again, honesty is the key.

“You have to be transparent and you have to own up to your strengths and weaknesses,” says Gustafson. “Never over-promise. People will gravitate towards brands they trust. They will still value quality over price even if their own budgets are under pressure.”

So, communication has to be scrupulously honest. It also has to be frequent.

“The level of communication clients want to have with us is more than in more certain times,” says Mark Buckley, head of UK client services and distribution management at Aviva Investors. “There’s a tendency by some to step away when in fact what they need to do is step in. Managers that go missing in this period will pay for it when clients come back.”

Companies can’t control what happens on the markets, says Buckley, but they can control their responses to what happens. Clients don’t want standard reports at the moment. They want their investment managers to talk to them and help reduce the surprises.

The emphasis of the communication that clients are seeking has also changed. Companies need to be ready to go with that. “If you look at the flow data there’s not a lot of opportunity to engage with clients on where to invest more money,” says Del Rey. “On the institutional side, you can’t just talk about investments. You need to talk about counterparty risk and governance. You need to be prepared to talk about what the client wants to talk about rather than what you want to talk about.”

Communication also needs to be appropriate, says Walsh. Now is not the time for Champagne and Beluga caviar receptions.

It would be a mistake, however, to conclude that brand is a non-essential piece of frippery, the tinkling cymbal we’re trying to avoid. Brand is still hugely important and there is an opportunity at the moment for companies that do have the right ingredients to establish a winning position for the future.

In a sense it’s simple. “The essence of brand is getting your message out simply and consistently,” says Walsh. “People overcomplicate it. Financial services could learn a lot from other sectors.”

In another sense it’s not simple at all. Asset management companies are notoriously bad at brand communication, perhaps, suggests Currie, because a lot of asset management companies are run by fund managers.

“Do you ask bean counters to do finger painting?” he asks. “These are people who aren’t very good at understanding creative disciplines.”

For asset managers, then, communicating brand requires not just a strong culture and a willingness to be honest about that culture, it also requires courage, for example the courage to delegate to finger painters. If that’s true in normal market cycles, it’s particularly true now.

“Don’t be timid,” says Currie. “Asset managers tend to run away when faced with the bleakness of recession. What we need is more display ads and more people doing things.” ©2009 Funds Europe

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