Jan. 2017

2017: The Ongoing Evolution of Marketing in the Investment Industry

Since the 1990s, we have seen large and occasional, rapid changes in what is required to successfully raise assets under management (AUM). The birth of the internet in the ‘90s is perhaps the biggest catalyst to the information arbitrage conducted by asset owners and their advisors, and it has in some respects leveled the playing field for managers of all sizes, strategies and goals.

As recently as the mid-2000s, assets were raised on the basis of relationships. A percentage of allocations were uncovered and executed based on the meritocracy of data, frequently derived from performance measurement databases, third parties or within the investment consultant world. These databases have soared in size with the addition of alternative investments, hard assets, social investing, and so forth, being implemented more frequently and becoming far more mainstream than just ten or twenty years ago.

Even today, many allocations are made from bonds formed at conferences and golf outings, and are sealed at investment committee meetings. There is an entire industry built around these events, which are overpopulated by professional salespeople from service providers and asset managers. Today, however, they are more thinly participated by asset owners, allocators and the most trusted consultants to their organizations, making this approach less viable.

Although around for a while, as we entered 2012, the use of thought leadership increased, and a wide range of content marketing took hold. Those who figured out the benefits of content marketing were the smart and innovative ones, because that concept (although now mainstream) had not yet been beaten to death in the media.

More recently, innovative managers supported by E5A have added real, math-oriented marketing—not just in words, but in action—focusing on data that consistently leads to winning new assets. They are leveraging a more quantitatively-focused approach. These are the firms led by managers who realize that outreach, relevancy, transparency and engagement need to be highly strategic. Successful and efficient marketing means focusing on creating and distributing relevant, logical, and interesting content, laser-focused to their carefully selected audience. One cannot market to public funds, sovereigns, family offices, endowments and foundations, independent RIAs, UHNWI or the mass affluent the same way. The broader the audience, the less relevant the data, and the weaker the messaging. Each lowers the probability of success. Each facet of marketing is intended on raising the probability of success; it is a math game, aided by strong product and a compelling investment process. As my old uncle Albert Einstein said, “If you can’t explain it simply, you don’t understand it well enough.” We add relevance to our prospects and add in layers of touchpoint messaging, based on where each prospect is in their allocation process, and the manager in their selling process.

This is an industry that is first to try, perfect and adapt new ideas, technologies and algorithms on the investment side, and yet, wears as a badge of pride of “last to adopt” on the marketing side. I venture to say that this holds even more true for hedge funds who refer to their sales teams as marketers—a title that is confusing even to themselves.

In 2017, it is already all about data. Everything we do is reliant on data, and data analysis leads to fact-based decisions and actions. Forward-thinking organizations make data-driven decisions, rather than relying on instinct and experience (which may no longer be relevant, depending on situation). The ways firms become successful and turn into tomorrow’s big brands who raise significant assets are no longer based exclusively on relationships. And the new key relationships they are building are derived from attribution analysis, built on data that was the catalyst to investing the time to nurture the right relationships. “Marketers” don’t lose their job with the implementation of a data-centric AUM acquisition program, they are there at the right time to accelerate closing new clients and AUM.

We at E5A understand this math-human balance. We apply multifactor modeling in order to accurately capture and analyze data. Just as important as understanding and utilizing data is understanding the most efficient method of reaching out to the right people. Data, media and messaging personalization are correlated. As data increases, the ability to customize and personalize increases as well. In a direct to retail level, managers need to learn how to communicate the personal touch at scale. They need to be aware of how to leverage data in a personal way, without revealing just how much they know about their prospects (to avoid appearing creepy). There is a fine line between making someone feel special through personalization, and making them feel invaded. Balance and nuance is, again, required.

In 2016, we honed and optimized our processes. It was all about data and we are confident that in 2017 it will be too. As we test, measure, refine and optimize, we will strive to continuously innovate and understand how to successfully assist our clients in gaining new, sustainable AUM.

What will your 2017 look like? More of the same or taking strategic, well-calculated steps? It is in your hands.

Andrew Corn is CEO of E5A. He is the former CIO of Beacon Trust and Clear Asset Management, where he led his team’s development of a multifactor model to manage long-only equities, design ETFs, and managed two hedge funds.


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