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As the ETF market in Europe grapples with the challenges of market structure, transparency and regulation, Fiona Moore at Northern Trust explains the role that service providers can play in advising clients of the latest developments and their impact.
The demand for income investing solutions has become more evident each year. Pioneer Investments has engaged in extensive research to identify the key trends behind this demand.
Marketing and communications managers have a vital role to play now that investment institutions are contending with aggressive competition, increased regulation and volatility. As well as enabling the company to succeed in new markets, they must protect and maintain its brand and reputation. Strong investment capabilities are only part of the story: top-quality distribution to investors is also essential.
Confronting a crowded market by engaging with the target audienceIn a market where investors have ever more options to choose from in most asset classes, fund managers can struggle to make themselves heard above the large amount of marketing noise being generated. Will Gold, Head of Investment Marketing at Old Mutual, says it is important to grab the interest of potential investors in a highly competitive market: Communicating in a way that captures the audience's attention and makes your offering stand out from the many alternatives is critical to commercial success.
Achieving this is no simple matter. It is vital to understand the target audience, tailor communications specifically to them and check regularly that messages are being received in the intended way. This means providing information that is relevant and appropriate to each individual market and group of stakeholders. End clients are not the only target; distributors who sell the funds in the local region are also a key audience and it is important that they feel the documentation and communications are right for their market.
Tailoring the message and getting it across effectivelyAs globalisation progresses, marketing and communications managers need to have far greater awareness of geographical and cultural factors for the purposes of both content-driven marketing and social monitoring. Pablo Navascues, UK Managing Director at CLS Communication, a provider of writing, editing and translation services to the fund management industry, observes: There has been a shift in the outlook of marketing departments, as they have realised the importance of controlling the tone of voice of the messages they put into each market. A fund manager who worked with CLS on a new fund launch last year made a similar point: documentation that is not only factually accurate but also reflects the characteristics of each market is vital.
At the very least, communica-tions and marketing need to incorporate and reflect recipient cultures, and they should preferably do so in the local language. Gone are the days of fund managers simply relying on the international language of finance being English. Navascues offers the example of a fund manager distributing funds in Germany: By translating its website and all of its marketing collateral into German, it was able to appeal to potential customers who would otherwise probably have invested elsewhere. This proved to be a very successful strategy. He adds that fund managers are becoming much more proactive in this area, and there is a clear awareness that it is ill-advised to rely on outdated communication.
Marketing the brand while staying on the right side of the regulatorsThere is also the challenge of presenting complex facts in a straightforward way. Providing consumers with clear information and keeping them appropriately informed before, during and after the point of sale is one of the six consumer outcomes of the Treating Customers Fairly initiative launched by the UK Financial Conduct Authority (FCA). As Marcus Bolitho, Head of Marketing at Old Mutual, explains: The concept of treating customers fairly has a considerable impact on customer communication in terms of providing a balanced view of the products and services on offer and the potential outcomes of the investment. His colleague Gold agrees: It is our job to provide financial advisers and wealth managers with the support and messaging to help them guide their clients towards achieving their financial objectives. And the more marketing and communications managers can do to simplify the messages presented, the better these messages will be received. That applies to professional investors as much as it does to consumers. They want to know what benefits each product offers, and if you can do this in an engaging way that makes them stand out from competing products, all the better.
The commitment to providing clear information must extend to the online realm. Revisions due to regulatory changes and new products will require information on the company website to be updated to avoid creating confusion among existing and potential customers. In addition, any regulatory changes mean it is necessary to update multilingual documentation and file it with the relevant local authorities. This can be a time-consuming process if there is no strategy for dealing with such changes, and fund managers run the risk of falling foul of regulators if they do not complete the necessary work on time. Planning and coordination are therefore essential.
Protecting an intangible asset to achieve tangible results
While the value of a brand or reputation is listed on the balance sheet as an intangible asset, it is very real and concrete for marketing and communications strategies. Corporate communications professionals use social analytics to identify early indicators of reputational issues, and increasingly they communicate in local languages to do so. Managing reputational risk also involves monitoring how the brand is presented by third parties in the media, for example on websites or in newspapers. In addition, it is very important to ensure that the message and tone of voice remain consistent across all communication mediums, so that the brand retains its credibility.
Any effort put into improving distribution to investors will undoubtedly pay off. And ultimately, as we have seen, the key to the distribution process is effective communication. As CLS Communication's Navascues emphasises: Every current and potential investor will be influenced by the fund documentation and communications in deciding whether or not to invest.
By focusing on this area, fund managers can overcome the many challenges they face and gain the edge in a highly competitive, investor-driven market.
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Visiting Brazil, Chile and Colombia earlier this year I was struck by the way in which Latin American institutional investors are shifting their allocations away from simply the traditional domestic market to incorporate wider asset classes, such as private equity and with global exposure, including Europe.