The changing face of funds management marketing
4 Minute Read
Back in the good old days when Ciara and I worked together at Macquarie Bank, BDMs were the superstars of sales for investment products. Every ounce of our team’s time and energy was dedicated to supporting face-to-face marketing through major events and one-to-one meetings with advisers.
Fast forward a decade and we’re finally seeing funds management change their ways and take steps towards new channels to grow their market share in a more competitive environment. This evolution in their strategy is a long way behind the retail banks, with their digitally-savvy customer base, but they’re starting to pick up the pace.
Over time we’re seen three key trends transforming the way asset managers market their products, access investors and grow their business:
- More competition, less advisers
Funds management is thriving in Australia. A joint 2021 report from Deloitte Access Economics and ASIC on competition in the industry found evidence of “new market entrants, innovation and low fees by global standards.” Their view that there’s ‘evidence of recent market entry and exit,’ is something we’ve seen in our client list at Lexicon too. From portfolio managers leaving big funds and starting up boutique companies, to big US-based managers making their presence felt in Australia, the make-up of the market is changing.
“Three of the largest fund managers in Australia by FUM in 2019 were international managers who were not among the top 10 fund managers in Australia in 2009.”
Competition in funds management, ASIC/Deloitte Access Economics, September 2021
While the number of funds on offer is rising steadily, a major sales channel for their products is heading in the opposite direction. Financial adviser numbers have been falling since the Hayne Royal Commission and are expected to be at half their pre-RC level by 2023. Companies need to take notice of this trend in adviser numbers and explore what it means for both their sales approach and their marketing strategy and activities.
- From relationship-driven to hybrid
This shift away from intermediated sales is happening in tandem with another big shake-up in the funds management sales journey. While still important, the face-to-face interaction that dominated sales a decade ago is now part of a more complex multi-channel sales experience. With the exponential rise of digital apps and channels for accessing all kinds of brand messages and content, no company can ignore the importance of digital for building brand awareness and funds management is no exception.
“The next generation of distribution will combine advanced digital capabilities with the human touch. As one asset management executive told us “Overnight, everyone became a hybrid.”
Global Asset Management 2021, Boston Consulting Group
As a result, what we now have in funds management is a hybrid model. Digitally-driven awareness and lead nurture campaigns and content prepare the way for the relationship-building that gets sales over the line. It takes a tech-enabled marketing team to deliver this ‘always on’, multi-channel digital brand experience.
- Rise of the engaged investor
Retail investors may account for just 5% of the funds management market as direct clients, according to the ASIC/Deloitte report, but that doesn’t mean they should be out of the picture when it comes to marketing strategy and spend. The Royal Commission made everyone – and investors in particular – far more aware of the responsibilities of financial advisers and anyone else involved in managing wealth.
Add to this the hike in the cost of advice and we can expect to see more Australians go down the DIY route, making it more important than ever to market to end investors. And there’s good news on this front too, as young investors are becoming more engaged with the many opportunities now available to take charge of their future wealth, with offerings like Magellan’s direct to investor funds and extensive listed ETFs now available.
What next for marketers?
Funds management is now a mature market in Australia, with more competition and less customers. This makes funds a commodity product. In our experience, all funds have a great team and process and some have good performance, which is something that – as compliance and Magellan will tell you – doesn’t make for a reliable marketing play. This means companies have no option but to make a significant investment in building their brand. Because you can’t build brand loyalty if prospects and customers don’t know and understand your brand.
The second insight to act on is that digital now drives top of funnel activity around awareness and lead generation. Building a multi-channel, automated marketing funnel takes a lot of work – but it’s non-negotiable.
And finally, spend a fair share of your time and budget on the end investor, both as a direct audience and as an indirect customer through the financial advice channel. This starts with a value proposition tailored for this audience and a focus on making your fund and asset class accessible. This will give you the strategic elements to support content that’s investor-friendly, whether clients are accessing it themselves or through their adviser.