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Firms adopting new methods of communication for existing and potential clients
June 2019, LONDON - Asset managers are increasingly making use of digital tools to better communicate, according to the latest The Cerulli Edge—Global Edition.
Spurred by regulatory pressure, technological advances, and demographic trends, firms are having to invest more resources and effort into communicating with clients, says Cerulli Associates, a global research and consulting firm. However, achieving a balance between transparency and compliance is proving difficult.
Traditionally, asset managers have had little direct relationship with those whose money they invested. Instead, the chain of distribution enabled fund firms to conduct their relationships with end investors through wealth managers, brokers, discretionary investment managers, platforms, and financial advisors, among others.
Those elements remain largely in place, but other dynamics have changed. Fund firms now operate in a climate in which regulators and investors are demanding greater transparency and clearer information, while active managers are under pressure to justify fees in the face of increasing competition from passive managers and non-traditional competitors. Asset managers are having to pay much more attention to the way they communicate with existing and potential clients, distribution partners, and the wider population.
“With the needs and demands of investors evolving and advances in digital technology opening new possibilities around communication and engagement, the need for firms to differentiate their brands has become more significant and challenging,” says André Schnurrenberger, managing director, Europe at Cerulli. “This has taken on an extra urgency as younger investors increasingly handle their own affairs through broker platforms and robo-advisors.”
The rise of the direct-to-consumer (D2C) market—supported by the decline of defined benefit plans and the various consequences of the pension freedoms—has created a more fragmented investor base and forced firms to be more responsive to retail market dynamics.
Even in the institutional market, where fund commentary remains the primary form of client communication, managers are investing more resources in commentary and investor letters, adding personality, relevant detail, and seeking to use plain, accessible English.
Cerulli says the effects of regulatory demands can be seen in the attention being paid to the manner in which objectives, fund strategy, performance, and product details are communicated to investors. Several firms produce “primer” documents describing fund culture, philosophy, and investment approach, setting out in clear terms what investors can expect from the company and its products.
Targeted marketing presents particular difficulties in a highly regulated industry, but some managers are implementing digital propositions aimed at specific market niches. Infographics and interactive tools are gaining in popularity, in many cases replacing traditional PDFs and factsheets as the chosen methods of accessible explanation of complex issues.
Differentiation can be expensive. It can also be complicated, given the importance of accurate targeting and tailored messaging. “Trying to manage the transition to a different way of doing things is leading firms into common mistakes such as over-simplistic targeting,” notes Schnurrenberger.
The use of filmed content and podcasts is on the rise, fed by a growing preference for digital engagement. Filmed material ranges from straightforward manager interviews and roundtables to high-quality films that introduce investors to particular themes, services, or products. Infographics are also being used to varying effect, more recently as a brand awareness tool.
“The challenge facing firms embarking on multi-channel communication is ensuring that resources are spent on producing the right type of content and having the analytics in place to accurately assess the effectiveness of the content and its distribution,” says Schnurrenberger. “Perceptions are changing—most asset managers understand that being distant from the end investor is no longer an option. But it is a work in progress.”
• In the U.S., nearly two-thirds of the institutional marketers polled by Cerulli in 2018 cited expansion of digital efforts as a top driver of change within their organization. In terms of rating “very effective” indicators for tracking digital marketing performance, 38% of the respondents opted for click-throughs, with both open rates and content views each scoring 31%.
• Cerulli research reveals China is a success story in the digital sale of funds in Asia, with more than 33% of investors buying mutual funds via mobile apps. However, although technology and innovation are reshaping the way mutual funds are marketed and sold, established marketing activities such as roadshows and telephone calls continue to thrive in some markets in the region.
NOTES TO EDITORS:
These findings and more are from: The Cerulli Edge—Global Edition, June 2019 Issue.
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