Build a great differentiated brand or drown in a sea of sameness. Today having a strong investment management brand is not a nice to have, it’s an imperative.
For years building an investment management brand was left to the big mutual fund players and others vying for retail clients. Then, with the global financial crisis and the massive outflows across segments, firms of all shapes and sizes rushed into the market with what they thought was “branding”. Today, just about every investment management firm has a name, logo, website and a trusty pitch book—likely all blue and peppered with navigational images and icons. Many thought, therefore, that they had built a brand and that this, combined with good, consistent performance was enough to get them noticed, win business and develop loyal clients. Once upon a time that may have worked, but not today.
With the increased complexity of the financial markets, expansion globally where firms may be virtually unknown, commoditization and a growing preference for specialty managers—many are taking serious stock of their brands.
The Value of Truly Building an Investment Management Brand
Brand strength is the second most important attribute in selecting an investment management firm after performance. As the lines between retail, intermediary and institutional buyers blur, more stringent disclosure requirements are imposed and with the move to more global distribution, brand and reputation are increasingly more important drivers in clients’ decision to invest. As the following chart shows, according to intermediaries, brand strength and reputation ranked as the second highest factor when considering a firm.
Key Drivers of Asset Growth
The field is crowded, noisy and confusing. Today hundreds of investment management firms with countless strategies and vehicles are battling it out for assets. Add to that the lack of distinction between firms, it’s nearly impossible for potential investors to see through and understand what a firm does and does better than its competitors. Net, it takes a lot to win and retain loyal clients.
Key promises sound the same. Without doing the work to create meaningful differentiation, most firms push out promises that sound the identical, creating a virtual sea of sameness. Here are some commonly used messages that permeate the market and have no specific insight into the manager:
So, to get noticed in an over-crowded marketplace a firm must build a brand that means something and ultimately matters to its clients. To do this, the story it tells must be clear, differentiated and memorable.
Investment Management Firms Face Unique and Formidable Challenges
Simply put, investment management brands are different—from their products and services to their diverse audiences—and operate by a different set of brand rules.
How do you brand thinking, advice and insight —all intangibles?
With consumer goods or manufacturing, customers can “experience” a product, they can taste it, wear it or drive it, and this offers more opportunities for differentiation. However, with an intangible based brand, creating an experience and ultimately building a brand is much more difficult. In investment management, the proposition rests largely on the thinking, insight and expertise of the managers and they are therefore chiefly responsible for conveying the brand to investors. It is important to identify and cultivate a brand idea that captures the essence of the “intangible”, is at the core of what the firm stands for, and that all can rally around.
How do you build an authentic brand experience when your audience is layered —sometimes its B2C, sometimes its B2B, sometimes it’s both and both at the same time?
Investment management brands are neither consumer brands or B2B brands, they’re different. Their primary audiences are a mix of professional buyers—financial advisors, plan sponsors, institutional consultants—and consumers with very different needs and expectations. They must be perceived as offering the deep insight and information required by professionals and at the same time instill a sense of trust and confidence with end investors. Adding to the challenge, is that all of this needs to be conveyed through a complex distribution system. Deep knowledge of the markets and investment products—from traditional to non-traditional—and a solid understanding of the nuances of various distribution channels is key to mapping out relevant propositions and communications.
Investment Management Layered Distribution
How do you build an investment brand when what investors are buying is a promise that their assets will grow and outperform, when the future lacks certainty and that promise is based upon past performance?
Customers and intermediaries alike are ultimately expecting that their assets will grow and they are being asked to believe that they will based on past performance and information. The problem is that the future is uncertain, promises are just that, and history doesn’t necessarily repeat itself. Therefore, clients need reasons other than history to believe that a firm will deliver. It ultimately comes down to trust. Crafting a brand of reliability, openness and confidence are keys to gaining that trust.
How do you build trust, because that’s what it takes, in an industry that is largely considered not trustworthy?
With the financial crisis came significant investor skepticism and lack of trust in financial institutions. It was a logical outgrowth. Rebuilding trust starts with uncovering the firm’s authentic identity and value and from there a compelling brand can be constructed.
The Keys to Building a Powerful Investment Management Brand
Developing an investment management brand takes not only an understanding of the complexities of the industry—intermingled audiences, complex distribution and nuanced products—but also the knowledge and expertise of brand-building.
Identify a core, unifying brand idea that embodies the purpose of the brand and the ultimate benefits to all that it engages. Brands are essentially about a firm’s identity, driven by purpose and meaning, and the connection that people make to that purpose and meaning. So, getting to the essence of a firm, who it is, what it believes, how it’s better or different than others and telling a credible, compelling story is how great brands are created.
Understand what each target audience needs to hear to engage. Because audiences are often layered and over-lapping, spend time developing a brand messaging strategy that communicates effectively to each important audience and at the same time builds common equity for the benefit of each product or service.
Tell a meaningful and differentiated story. For years, investment management firms stayed in a very narrow range of brand building—lackluster messages focused largely on performance, rock-star teams, and complex, at times mysterious, descriptions of who they are and what they provide. It became a maze of mirror images making it difficult to distinguish one firm from the next. So, the new rubric is about telling a true and meaningful “story” that is the surest route to clarity and differentiation.
Be consistent in all communications and behaviors. Again, investment management firms must appeal to a variety of different audiences. Add to this that each distribution channel has a distinct process and preferred system of communication. This condition offers ample opportunity for messaging to break down and ultimately dilute brand awareness and appreciation. To develop investor confidence and build brand equity, careful attention must be paid to consistency in communication and alignment with the brand messaging strategy.
Invest in building the brand. For a time, with good performance, generally content investors, reasonable compliance constraints and an intermediated sales process, many firms were reticent to develop a powerful brand. In fact, their strategy was to “stay under the radar”. Then the markets melted down in 2008 creating a fog of mistrust of the industry. This changed the game almost overnight with clients looking for reasons to believe beyond performance. This is where investing in a powerful, differentiated investment management brand is now an imperative.
Building a strong and enduring brand in the investment management business is both an art and a science. The pursuit involves two essential pieces; understanding the true and authentic identity of a firm to create powerful differentiation, and deep understanding of key audiences to unlock what they need to hear to engage. From this foundation, strong brand can grow.
For any questions, contact:
John K. Grace
President & Managing Partner
February 22, 2017 No Comments
This past week has been a flurry of activity between Apple and the U.S. Justice Department about unlocking an iPhone used in the San Bernadino terrorist attack. It is a profound question, and not a new one. Apple’s response so far has been consistent with the brand bond it has with its loyalists… that the relationship with consumers takes precedence.
In the New York Times, Eric Lichtblau and Matt Apuzzo cite that Apple’s refusal “appears to be based on its concern for its business model and public brand marketing strategy” rather than a legal rationale. They are partially correct. Apple knows that it is in the “relationship” business… and will, at all costs, defend that relationship with its consumers.
In a recent post, we focused on “Why Authenticity Matters”. As we wrote, “Authentic brands do what they say. Their behavior is consistent with their promises”. Apple is being true and authentic to its very reason for being. In the face of the immediacy of a legal challenge, it has deferred to its brand before compromising.
There is no question that this issue is complex. From a technical and legal standpoint, opening up the code could set a significant precedent that could have broad impact across many companies with strong intellectual property as a basis for their differentiation. Imagine some people being poisoned by drinking Coca-Cola and the company being asked by the Justice Department to reveal it’s 130 year-old, secret formula for the purposes of helping in a criminal investigation. This example isn’t as emotionally loaded as dealing with a terrorist situation, but the precedent is similar.
On the other hand, any way the authorities can gather information to thwart terrorist activities is a good thing to do. So this becomes a thorny problem.
There is no question that Apple needs to find a way to help the Justice Department without compromising its bond with consumers. Reading between the lines, both Apple and the Justice Department have essentially acknowledged this. The question is how to provide this information while protecting the Apple brand. I am confident, once the bluster dies down, this will be accomplished.
February 22, 2016 No Comments
Generation Y Should I Trust You? The Challenge for Brands
Brands are symbols of trust – we use them as navigation beacons in a landscape of uncertain options. But the next generation of consumers is re-defining what it takes to be trusted. At the core of this re-definition are two attributes: sustainability and authenticity. Brands that lack those qualities will struggle increasingly to attract either consumers or recruits.
According to research by The Intelligence Group, this next generation of consumers, described as Generation Y or ‘Millenials’, want to make the world a better place, and they’re demonstrating this intent in the brands and products they choose, ‘… products that follow ethical practices and are aligned with social causes’. (adweek: responsible youth)
For these digital natives, sharing is a normal part of life. Everyday they share photos, ideas, technology and information about themselves. Defined by The Cloud, a key facilitator of this ‘open source‘ lifestyle is mutual trust and the brands that can demonstrate the qualities that drive trust, like honesty and authenticity, will benefit from Generation Y’s loyalty.
August 2, 2013 No Comments
What can the difference between a straight line and a circle teach us about building a sustainable economic system that fuels growth without destroying our planet? And what do brands have to do with it?
The answers are “lots” and “lots”, respectively.
This is the first in a series of posts in which we will explore the relationship between brands and sustainability. So we thought we should start by questioning whether consumerism itself is sustainable. Is it reaching the end of its useful life? And if it is, what can replace it as an engine for economic growth?
The law of unintended consequences has meant that the existing model of consumption makes many of us sick, unhappy, stressed, and time-starved; it fails to produce affordable food that sustains healthy life; it fails to offer work that gives us a healthy sense of meaning and purpose; it gradually renders the planet itself unviable; and it makes only 1% of us wealthier.
For most of us, this is not a good deal. For our children, it’s disastrous.
In his book ‘Cradle to Cradle’, William McDonough recognized that in nature’s cyclical design, resources are infinite. Yet human industry is driven by a traditional linear economic model: Take (resources) – Make (stuff) – Dispose (dump when the new version comes out).
So which is the better (more sustainable) option? That’s where the circle comes in.
July 15, 2013 No Comments
David Brooks, an Op-Ed Columnist at the New York Times writes a very interesting article about the differences between the use of and understanding of brands between the Americans and the Chinese. His premise is that the Chinese are not good at building brands that connect with consumers in the West despite the fact that they have the largest economy in the world. This will hinder their achievement of global economic dominance. He is right.
However, one of his notions is only partly correct and flies in the face of what great brands work hard at every day. Brooks believes that “People who create great brands are usually seeking some inner longing of their own…”. In this he is thinking about romantic notions of founder-led brands like Nike or Ralph Laruen.
What he is missing is that great business leaders spend a great deal of time and energy to understand their customers and their needs, and then address them in a way that builds an enduring relationship that can last a long time. In most cases it is the diligence and hard work requiredto build stronger relationships with consumers than competitors in every category that leads to sustainable market leadership.
Much of what Brooks writes about is very true, and he is astute to recognize as much as he does. Where he misses the mark is realizing that there is a process and method to establishing and building a strong brand that connects with key audiences that works on it’s own and is not necessarily founder led. Just look at a few minor brands like IBM, General Electric, BMW, New York Yankees, Mayo Clinic, etc. Sure each was founded by great thinkers and leaders, but they have evolved into very strong brands generations past founder longing.
Congrats to Brooks for recognizing how brand have become an engine of the Western economic growth. His basic premise is more than correct.
May 31, 2013 No Comments
To ensure a seamless image, smart brands take responsibility for both the content of their ads, as well as the environment in which their ads appear.
Vigilance is especially necessary online, where intelligent software and e-marketing technologies allow brands to target the user, not the environment. The old adage of ‘fish where the big fish are’ has never been more true. With varying degrees of success.
A friend of mine recently joked on Facebook: ‘If the ads that Facebook so cleverly targets at me are correct, I need to: a. Lose 9kg. b. Buy a motorbike and c. Attend the classic rock concert at Willowbridge Barnyard Theatre. Now that’s artificial unintelligence if ever I saw it.’
She’s a fit, slim, married, mother of two in her 40s, who lives in the suburbs and drives a family-friendly 5-seater VW.
But getting it wrong can have more sinister results. What happens when a brand finds itself in an online environment that potentially undermines its image? [Read more →]
April 30, 2013 No Comments
Protecting & Enhancing Your Brand in Social Media – Whether You’re Joining or Creating the Conversation
As the old saying goes, “you have to be in it to win it”. That pretty much sums up the role of social media for brands today. Social media is no longer just one of many tools a marketer can use. It has all but become the cost of entry. In the 2012 Social Media Marketing Industry Report, 94% of marketers said that they use social media for marketing purposes. It goes without saying that some social media marketing is better than others, and therefore more effective at driving business results. But the bottom line is that companies can no longer ignore social media. This is true for every category and industry from consumer goods to professional services, from healthcare to the financial industry and for both B2C and B2B.
Here’s the rub: Because social media is a two-way street, gone are the days when a brand can control messaging through a monologue of traditional advertising and communication. What is compelling to consumers today, and to a large extent, expected, is a dialogue, back and forth. These conversations can be strategically initiated by the brand to disseminate a particular message, i.e. a new way of “advertising”, or a brand can strategically participate to help steer the conversation in a way that protects the brand.
Either way, whether you are creating the conversation about your brand, or joining in conversations about your industry, which may ultimately involve your brand, follow these rules to not only protect your brand, but to take advantage of this new reality and use it to actually strengthen your brand:
April 3, 2013 No Comments
The postulate that “watering down” a brand has long-term affects is generally well understood by smart marketers everywhere. But recently, two brands have been caught up in literally and figuratively watering down their products and consequently, their brands. We’d suggest that the act of watering down a product, or even the suspicion of it, will have very serious and long-term impacts on the business.
The two brands are Maker’s Mark Kentucky Bourbon Whisky and Budweiser. Maker’s Mark announced that they were lowering the alcohol content of their premiere product from 94 proof to 86 proof because demand is exceeding capacity, and consumer testing had indicated that the difference was undetectable. While possibly statistically true, the idea that slowly diluting a product so that the perceived change in the taste profile is negligible could end up taking the teeth out of a product and without ever understanding why. This incremental product thinking almost always gets manufacturers in trouble. [Read more →]
March 1, 2013 No Comments
And if it does survive, will it ever be as strong as it was again? It’s difficult to know for sure but one thing is clear: the marketing leadership at Hostess Brands had failed to nurture a brand that is undeniably an American icon with a value far greater than it’s $68 million year-to-date revenue. After all, how many brands can invoke nostalgia like Twinkies has in recent days? How many brands have such an impact on society that they end up on the front page of the Wall Street Journal or a feature on every major news program? Not many when you consider the thousands of brands out there, and yet, the marketing leadership at Hostess Brands has done little over the past few decades to understand, let alone capitalize on the equity.
Twinkies was introduced in 1933 by The Continental Baking Company in Inianapolis to utilize the strawberry shortcake machines that stood idle when strawberries were not in season. They were originally filled with a banana flavored cream but switched to vanilla cream during WWII when bananas were rationed. It was so popular that they never switched back.
November 20, 2012 No Comments
For those living through the “Perfect Storm” of October 2012 that hit the East coast of the U.S., we all, collectively, had our senses heightened out of need. Many had no electricity, the coast had severe flooding, wind damage was everywhere and there were all manner of challenges in the days following the storm. What I found interesting is how some well-known “brands” comforted my soul as the winds howled and the storm raged on.
For example, we heated up Campbell’s Chicken Noodle and Tomato soup in the evenings over a propane stove. More than the warmth of the soup, the Campbell’s brand enveloped us with a smile and a comforting feeling that all would be OK. It was like a grandmother’s hug.
November 12, 2012 No Comments