June 2016

MARKETING ROUNDTABLE: Public image limited

Marketing and advertising have seen big changes, with digital growing ever more dominant. Our panel talked about the standout campaigns of recent years, reaching the retail market, the RDR and future trends. Rob Sanders (head of group marketing, Aberdeen Asset Management)
Mark te Riele (head of marketing, Asia Pacific and Emerging Markets, BNP Paribas Investment Partners)
Diana Mackay (CEO, Fund Buyer Focus)
Simon Hildrey (head of marketing and distribution strategy, Liontrust Asset Management) Funds Europe: What have been the priority areas of marketing spend within your firms over the past 12-24 months, and what has driven this? Mark te Riele, BNP Paribas IP: Change has clearly been on the digital front. The majority of marketing spend goes to digital, whether it’s the development of campaigns on the internet, or apps and social media. It is a completely different ballgame in the way you approach it, the way you develop it – and most importantly in the way you measure the outcome of it. The tools that we’re putting in place allow you to track outcomes. You can actually see when people open a research document – and, of course, when they don’t. However, this all brings in huge additional requirements in terms of putting systems in place to analyse all the data created by these systems, and the industry needs more investment in making those systems, like Salesforce and various other marketing tools, communicate and aggregate data so that we can better analyse our marketing efforts. Rob Sanders, Aberdeen: Yes, most people are moving in the same direction. Much of our spending over the past couple of years has been less into digital marketing, branding and advertising, and more into the digital infrastructure underneath it. This means data platforms, Google Analytics products, data science – basically, the people who can join the dots. There’s a lot of data in digital, but also quite a lot of noise and we’re trying to work out how to combine that data with CRM [client relationship management] data – such as Salesforce.com and fund flow data – to find patterns, to find ways to drive sales targets and marketing initiatives. We are learning along the way. Our communications teams are being reshaped to have expertise in producing thought-provoking content. The priority for us is to engage our clients, not necessarily to write another piece on the markets. Simon Hildrey, Liontrust: I would highlight the infrastructure piece, too, as we’ve invested significantly in CRM and databases. Digital marketing, of course, is a big area of development for us. We have started using social media and have grown our marketing team to enable us to increase the amount of content we can distribute through the various media channels. As a marketing team, we are increasingly working with strategic partners and intermediaries, whether this is to provide bespoke investment content or marketing and educational material for intermediaries and their clients. Last year, we introduced an automated factsheet workflow system that can be expanded to produce other marketing-related documents. This all helps us to target clients with the content and collateral they want to receive and service them in the way that they want to be serviced. Two key objectives of this infrastructure are to generate sales leads and to service the client more effectively. As well as this, we are also focusing more on the consumer side, too, which includes engagement with communities, football sponsorship and sponsoring London Zoo. I think community engagement and engagement with personal investors is going to be really important in the future, which we are doing in conjunction with intermediaries. Sanders: Many firms are at the same stage of this journey and I don’t see, within our industry, anyone doing exceptionally well. Most of our learnings have come from outside of the industry, from pace-setters like Facebook and Google. We’ve talked to Amazon about data management. Amazon is exceptionally good at segmentation and targeting. We are trying to see where we can bring those learnings back into our own processes. But I think most companies will tell you to just start somewhere and keep going, learning along the way. Diana Mackay, Fund Buyer Focus: Fund selectors’ demands for transparency are moving all the time. There are people like Neil Woodford that are blogging regularly and publishing the whole portfolio and raising the bar ever higher. This means you have to chase a moving target. Meanwhile, some complain there is too much information and they can’t absorb it all. Basically, there is information that clients need to be available as and when they need it, like factsheets. But there are other kinds of information that are critical to their day-to-day jobs and making that distinction in the delivery of information is quite important. Sanders: Currently, we are building a platform to organise the data plumbing internally. This means that all our data goes into one place and allows us to connect information to our clients in different ways. Te Riele: The issue with there being too much information is to do with personalisation, delivering the right information in response to the right request. People can process a lot more information these days than 20 years ago. You would not be able to cope with the same amount of mail at your desk 20 years ago as you would with emails you receive today. Worrying too much about overkill might be a trap. We have to analyse the client’s need and deliver information to the right people, and digital is a great way to do this because if people Google Indonesian equities, it’s as easy as that to deliver the right information to that person. That is a big shift. Funds Europe: Apart from your own, which have been some of the standout marketing and advertising campaigns of recent years in the funds industry? Hildrey: There is Aberdeen’s ‘The Seven Deadly Sins of Multi-Asset Investing’ with Joanna Lumley. We are always looking at the marketing campaigns and activities of non-financial services companies and I think much of what we need to do going forward will centre on aspiration and education, rather than simply product push. It is really important that we all promote the benefits of and the need to save and invest as much as and as early as possible. There is a role for promoting
funds and there is a role for education by fund management groups. Did it do well? Sanders: About 1.4 million end-to-end views last time we looked! Combined with our last campaign on equity investing, we have seen over 3 million views. Mackay: The best-scorer for ‘top of mind’ advertising in the funds industry across Europe is M&G Investments, according to our research. Sanders: M&G, to their credit, do a very good job but they’re more retail. When I say retail, I include the adviser and the gatekeeper in that. M&G is good at growing its brand, so all credit to them. Mackay: Much advertising is obviously to do with creating awareness among consumers. But that then, in turn, drives traffic through the intermediaries; it makes their jobs much easier. That’s one thing that I think has changed a lot in recent years. M&G has done well at this. Fidelity is ranked second and always scores very well, perhaps owing to a halo effect. When you talk to people about fund firms that advertise and they can’t immediately think of any group in particular, they are likely to mention Fidelity because of its longstanding reputation for end-consumer advertising. Fidelity always scores very highly. BlackRock, Fidelity and JP Morgan seem to be, on the global scale, very strong on multi-channel recognition. They are at top-end of recognition for producing client marketing material. We gauge this by asking fund selectors to rate the three groups that they regard as best for various categories of marketing and client marketing material. For material that can be passed directly to the consumer, these groups all score highly. Sanders: The marketing campaigns I like are less product-focused; the ones that represent a business as more forward-thinking, or campaigns that are more client-focused. So, within our industry, I like the Oppenheimer Funds ‘Invest in a beautiful world’ campaign in the US. I think that’s been very successful and it positions the businesses to align itself with clients and to be seen as a forward-thinking partner. I thought it was very content-rich. Outside of investment management but within financial services, I really like the Barclays ‘Digital Eagles’, which helps its customers to understand technology and digital without mentioning products. It represents the idea that ‘no one gets left behind’. Te Riele: In the emerging markets, which I cover, I would highlight HSBC’s Retail Banking business, the ‘global local bank’. They have been successful at making that link between themselves as a global player, and the emerging markets. Asset management can learn so much from other industries, and particularly when it comes to retail. We don’t do a lot of direct retail marketing, but when we do it, as an industry we realise that we’re miles behind, particularly fast-moving consumer goods companies. Several years ago we did a project with Procter & Gamble and we were blown away by what these guys know about marketing. The main thing we learned from that is that we, as executives, often have marketing campaigns that appeal to people like us. But the risk there is about whether our clients are like us, whether they think like us, particularly in emerging markets. We should always keep that in the back of our minds. For example, if you drive from central Mumbai to the airport, there are billboards from all the asset management companies on the road to the airport. They’re the most expensive billboards in the country. But if you think about it, most of their clients do not go to the airport. Those billboards are primarily there so that the global CEO sees them! In, for example, Korea and Indonesia, we know the key decision-makers in families are usually women. She is going to decide where to invest. To target those, you need to go to the shopping malls and stage educational sessions there.
We’ve been doing that and it’s incredible the feedback that you get. It’s a lot more effective than a billboard, for sure. Mackay: Perception is very, very heavily dictated by the product demand that exists at that time. So, if you’ve got a product that everybody wants, they’ll remember you, without you having to invest heavily in marketing the product. But, this traction only lasts as long as the product is in demand, so you can’t rely on it as a strategy unless, of course, you are a small boutique. Sanders: No matter how clever you are in marketing, you need to spend to make your ideas visible. At Aberdeen, we are moving away from products to be seen as an articulate investment manager across a wide range of capabilities and outcomes for clients, rather than being product-driven in terms of perception, but it’s hard. Most asset managers are known for standout products. Yet when you think of BlackRock, you think of BlackRock rather than a single product, which I think is great. Mackay: Yes, and it’s very interesting. BlackRock never has top-selling products, but they are almost always the top-selling group because they have a dozen or so products that are selling well across the range. Increasingly, intermediaries are looking at the group as a whole rather than by individual products. They’re looking for a group that can offer a whole range of products and a holistic approach in all markets that they’re active. For boutiques, of course, the dynamics are different. You can feature one product and do very well. Hildrey: The culture, growth and financial strength of all asset managers, large and small, as well as the fund management expertise are increasingly important to intermediaries. Mackay: This is because risk aversion is high and intermediaries are therefore looking for boutiques that have a strong investment process that’s not going to deliver any surprises. We reckon, generally, that product accounts for about 60% of overall perception of the group. So it is very significant, but if the product set is broadly based it translates into group perception, as opposed to the individual fund manager or fund. Sanders: My strategy, for some time, has been to raise the profile of the group as a brand. So we are recognised as Aberdeen, the asset management firm. Then I also need to raise the brand of ‘Aberdeen’ as an articulate asset manager across a range of capabilities. That’s down to content and saying smart things around equities, fixed income and so on. But it takes time to achieve this. Funds Europe: What is your business strategy in terms of reaching the retail market? In this market, are you mainly, or solely, operating through intermediaries such as platforms and wealth managers? Is direct-to-consumer important to you and if not, why not? Te Riele: We usually go through intermediaries or directly to institutional clients. As a consequence, the core of our marketing activities are targeting these segments. In most countries, we do not have a direct-to-consumer (D2C) channel. Our primary audience is always the fund selectors. In some markets, where those intermediaries require business-to-consumer (B2C) marketing, the fund buyer tells us that we would need to build brand. Consequently, in those markets, we will do B2C marketing. Hildrey: The starting point is that more people need to save and invest. For all of us, the intermediaries are key and will always be. It is important to raise awareness among consumers as well, however, to support intermediaries, promote a greater savings culture and for those who want to make non-advised investments. Fintech, online, the robo-adviser channel is all about giving people access to savings and investments. To make this work, we come back to how we encourage more people to save and invest in the first place and there is a key role for asset managers and intermediaries to work together in achieving this. People who choose not to engage with advisers may invest either through D2C platforms or directly. We want those people to at least know who we are and that we are a trusted brand. Sanders: Yes, whether people are exploring direct strategies or not, we clearly need to understand end investors and their behaviours, their needs and wants, to be able to help our intermediary clients. I have doubts that robo-advisers will exist as long-term standalone businesses. Incumbents will acquire them, integrate them and provide these digital services to the existing intermediaries. There will still be people who want to go direct to the market, and there’ll be people who will want face-to-face advice. There’s a lot more pressure for people to take responsibility for their own wealth creation and retirement and, at the same time, the digital age gives people more information so people feel more empowered to make those decisions. From our perspective, we want to make sure that we’ve got chips on different parts of the table... As an industry, we’ve stepped away from consumers to work with intermediaries. We now need to better understand the end investors to work with intermediaries in more effective ways. Aberdeen acquired Parmenion Capital Partners, which provides white-label services to financial advisers. We are also working with Hymans Robertson, an actuarial firm that is very advanced digitally, and we’re working with them around similar sorts of tools for workplace pensions. Hildrey: Our industry talks about diversification of asset classes and funds. But as businesses, it’s also about diversification of distribution channels and making sure we are playing across the various routes to market. We have a risk-targeted model portfolio service, for example, that intermediaries can white label for their clients and we manage the portfolios. I think it’s important to have such an offering and a range of solutions for the various distribution channels. Funds Europe: Now that the RDR in the UK is well ensconced, what have been the main changes wrought on the market from the point of view of marketing and brand? Sanders: With RDR, and also with anti-bribery and inducements rules, regulators clearly want to ensure that customers get good outcomes. So we need to continue to be thoughtful in how we work with distributors and intermediaries to help make those good outcomes happen. This means being more selective in our marketing, which for us means growing a kind of consumer profile, offering tools to investors to help them achieve best outcomes. Hildrey: It’s not just RDR. It’s the whole regulatory regime, which I think Rob is alluding to. There’s been so much regulatory change and with it a move towards greater transparency, which is an important and great development. Intermediaries have increasingly been implementing centralised investment propositions and the use of model portfolios, which have implications for asset managers. Mackay: RDR has made the savings and investment funds market much more volatile. In the UK, there used to be a regular stream of buy-and-hold monthly savings. Now we see more and more big inflows and big outflows into different asset classes and strategies. Sanders: Yes, whereas pension funds may hold assets for five to seven years, some retail segments perhaps for 15 years, we now see the wholesale market moving towards something like 12 months’ tenure of asset holdings. This is because the market has become more price- and performance-driven, and people can be moved around very quickly. The RDR principles are completely right, those of ensuring independent decisions. But the main unintended consequence, the ‘advice gap’, is difficult. But hopefully the technology solutions coming into the market will help. Mackay: In the Netherlands, I think the commission ban went much further. Here, the consequence has been a wholesale move towards passive funds because of regulatory pressure, but that’s not necessarily going to provide a good outcome for consumers. Te Riele: And there are various other examples. I’m from the Netherlands. What you will also see are distributors creating their own funds of funds and putting extra fees in there,  which kind of offsets the whole purpose of the RDR. Similarly, it is interesting to note that a big distributor that we work with in Asia basically saw all this happening in Europe and, without the local regulator imposing it, they introduced their own fund offering, which is basically them asking fund managers to give privilege shares without rebate. The distributor then marketed them as non-rebate funds that just charge fees, lower fees. Yet clients were not interested. The fees weren’t the main argument for people. In the end, the same old reasons applied as to why people want to buy a fund: performance, brand, things like that. If you have the performance, if you have the brand, the clients are happy to pay. I’m not arguing that more transparency is a bad thing but I wonder whether the RDR is achieving what it’s supposed to achieve. Funds Europe: How do you see brand marketing changing in the future? Hildrey: There will be more importance on brand trust and brand engagement in society generally. For asset managers, I believe the themes will be aspiration, engagement and education. Te Riele: Fintech hasn’t really touched asset management yet. It has only touched the distributors. But there are quite a few disruptive fintech companies that impact the financial industry or disintermediate the financial industry, yet it hasn’t really touched the core of our model, which is managing assets. There will be a big change at some stage, and it’s up to us to try to figure out what that change will be. It could be a more open platform. The advertising industry, for example, now has platforms where creatives share their ideas and the advertising agencies are not that powerful any more. Maybe fund managers will become more like these free agents and able to share their ideas more freely. Mackay: Over the last 20 years, the asset management industry has been largely directed by the fund manager and sales power bases. I think everything is changing now and marketing is becoming a third critical element, or should become so. For successful groups, marketing is a critical hub that touches every other aspect of the organisation. It is no longer just a function of churning out factsheets. Sanders: I think marketing and brand will shift to become more client-centric, rather than product-centric. By that, I mean more targeted marketing and marketing that is more values-based. ©2016 funds europe

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