Strategies for Asset Managers to Address New Challenges in the Market

Mar 11, 2020 | Asset Managers, Financial Advisors

The past decade has been a roller-coaster ride for the industry, especially with new transformations coming along the way. The industry has seen the rise of fund superstars Bill Miller, Bill Gross and Peter Lynch but it’s been facing an existential crisis for a while now and this is compounded with the current challenges of COVID-19 from both a markets and marketing perspective.

Several of the traditional asset managers in the US have derived benefits from the bull market condition with equities, but the shares of most asset management firms have hit their all-time lows. Also, it’s seen been seen that assets in the last decade have transitioned towards passive funds, and equities continue to outperform. Thirty-three percent of firms based out of the US had passive funds in 2018, and managers with $74 trillion are on the verge of a shakeout (Source).

Not to forget active funds, which have also witnessed a significant loss. The value of assets under management dropped by 4% worldwide in 2018, from $77.3 trillion to $74.3 trillion. In 2018, active products continued to struggle as core assets lost $1 trillion in assets under management (Source). So, it won’t be wrong to say that global asset management has reached its tipping point. Fee erosion is also likely to persist.

The fiduciary rule rolled out by the U.S. Department of Labour has only increased the scrutiny that active asset managers are poised to face. This will become more likely as they aim to secure their access to retail-advised platforms. Funds having historically poor track records when it comes to performance, peaking expense ratios, or increasing low inclusion rates on these platforms are highly unlikely to cut through brokers/dealers as well as advisory platforms in the long run.

There is also a considerable shift in power taking place from fund manufacturers to distributors. This transition is expected to result in greater compression of fees and margin. As such, managers of active assets will most likely need to strike a balance. They will have to narrow the gap between the fees charges for managing their funds and that being charged by different index-based products. They also have to take measures to boost the performance of active investment and increase their distribution to stay competitive.

When such volatile market conditions prevail, asset managers have to prepare to face challenges. Technology is likely to play a major role in transforming the sector. It’s a brave new world and more changes are likely to come in 2020. As such, for asset managers to survive and thrive, they need to follow the strategies below:

1. Differentiation strategy

It’s true that asset managers will be subjected to more scrutiny in the current market scenario. Not only them but the entire investment landscape. As such, asset managers have to resort to a well-planned differentiation approach; they need to set their offerings apart. One way to go about with differentiation is by scaling up their total level of AUM. This strategy will allow them to absorb a lower fee mark on their offerings. Some may go about with it through a well-known expert in a particular asset type of investment class.

Diversification is another approach that can help asset managers cope with the increased scrutiny. This strategy involves the provision of a variety of investment services and capabilities that will attract a much wider client base. There are many forms of differentiation, but it’s sure to be a key theme for active asset managers for navigating the disruption taking place in the market.

2. Reliable investment processes

In an era where the strong performance will catch the limelight, it’s important for asset managers to set up reliable investment processes that can be repeated. Such a strategy is sure to guarantee them with overall success. However, it’s extremely important for these repeatable processes to be supported by a seasoned staff.

Asset management firms have to hire teams that are well-backed and resourced when it comes to tools, especially risk management analysis. The investments should have a predictable pattern of return, making them like real revenue-generating assets in a highly diversified portfolio. When such a strategy is in place, asset management firms can elude key-person risk by resorting to mindful succession planning.

3. Implement online strategies

 The networking gap that’s been created by the decline in in-person networking events shouldn’t worry asset managers because there are digital and social media to come to their rescue. LinkedIn has emerged to be the most preferred one over Facebook, Twitter, Instagram or any other social channel. From recruiting to engaging to networking, LinkedIn allows asset managers to fill the gap.

Research by Peregrine on a hundred European asset managers for September 2018 revealed that 96% of all asset management firms have a LinkedIn presence.

As in-person networking events are declining and the use of LinkedIn is increasing globally, asset managers should devise effective LinkedIn strategies to keep their heads above water. Let’s talk about a few of them here and look at currently successful campaigns:

Franklin Templeton Investments and Pioneer Investments engage followers with rich media.

These two firms have excelled at producing insightful video, highlighting company culture and creating eye-catching graphics.

Franklin Templeton Investments has over 61,000 followers, a massive group of people that is constantly growing. This California-based investment firm does an outstanding job of posting industry news and content from their blog which makes the page an informative stop for investors on LinkedIn.

Pioneer Investments has about 20,000 followers on their LinkedIn page. Their greatest strength is posting job opportunities and industry news. Asset managers who follow their example will increase their brand’s fame.

BNP Paribas Investment Partners and Fidelity Investments use showcase and affiliate pages (You can download a guide to showcase pages here). These pages are highly dedicated in nature, meaning they allow financial advisers and asset managers to show different facets of their firm. The goal here is to segment their audience better, which, in turn, will give them a chance to reach the right people with the right service offering.

Although Showcase Pages are a relatively new feature on LinkedIn, asset managers shouldn’t miss out on the opportunity to derive some benefits from it. These pages can increase the level of engagement between asset managers and their clients. They provide users with a specific destination where they can find all the updates and information they need. The best part- these results derived from posting on these pages are easily measurable. By leveraging data points from measuring performance, asset managers can provide more value to their clients.

Asset managers should use multiple company pages and showcase pages to spotlight information relevant to specific company branches or affiliates.

BNP Paribas Investment Partners segment their audience through the use of specialised company affiliated pages. By creating a variety of pages, BNP can answer questions and post jobs targeted toward a more specific group of people. Also, this page has an awesome graphic for their header, which lists some big company stats.

Fidelity Investments uses their showcase pages to target a specific group of users. Their pages are used to segment their investors to better answer questions. Institutional investors have different needs than individual investors. Now investors can receive information that is more relevant and personalized and can feel more satisfied about their service.

Baring Asset Management and Citadel link to their own content.

There’s no better way for asset managers to keep LinkedIn posts brand-centric then to publish their own content.

Baring Asset Management posts link to research and press releases as part of their LinkedIn content strategy. This is an important part of establishing the Baring voice as an expert in asset management. Publishing research in a professional space encourages debate and promotes brand content in an authentic, reliable way.

Citadel uses their company page to promote company media from the blog, like community involvement and investment advice. Citadel uses LinkedIn to share insights into the asset management industry and targets professionals who do not have a Twitter or Facebook presence.

  1. Highligh the company culture

LinkedIn marketing for financial advisers and asset management firms is all about building credibility and trust. One good way to do so is by showing their company culture to their audience. Even a small event like a BBQ party at the office or a big event such as winning an award is worth sharing on the platform.

Showing off the company’s culture is showcasing the team and everything that they do to keep the business going. Such content creates a sense of what’s it like to be a part of the company—something that drives their recruitment efforts and creates a positive brand image. If a company is sharing videos of their culture on YouTube, they can re-share that content on LinkedIn too. It’s sure to work great for them.

  •   Leverage rich-media content

Video content is something that people love. Video posts on LinkedIn result in more than 300 million impressions. Also, company page videos are five times more effective in starting a conversation compared to any other type of content. They boost more engagement than text-based posts and keep audiences hooked onto the page.

As such, rich-media content is something that financial advisers and asset managers should have in their kitty. Besides videos, they can also share intriguing graphics, downloadable e-books and whitepapers, and other forms of interactive media. The platform allows them to get as creative as possible with useful infographics, attractive photos, interesting web pages, and short videos. All these content forms can be aligned to showcase the company and its service offerings.

  • Join LinkedIn Groups

One of the best features of LinkedIn is perhaps LinkedIn Groups. For financial advisers and asset managers who are facing a hard time identifying and getting leads, LinkedIn Groups are crucial. That’s because these online communities of business professionals and prospective employees allow asset managers to network and build credibility for their business. They can enjoy free and direct communication with other members and engage with them on a deeper level.

Pro-tip: You can message 15 members that you’re not connected to per month for free – no Inmail required!

However, asset managers should know the right way to gain influence on LinkedIn Groups. They should selectively engage with members of these groups and be as relevant as possible. They should ask valuable questions and contribute interesting views and opinions regularly. The point here is not to use the platform to sell. Be more subtle in informing group members about various financial solutions available to them.

  • Post Professional Content

LinkedIn updates are generally more formal than Facebook or Twitter updates and should be taken more seriously. Brand content should not deviate from the core company message and should be written clearly. That doesn’t mean the content should be dry or technical but LinkedIn is not the place for memes or trolls.

  • Network

Fund managers at firms like the ones listed above, should use personalised LinkedIn invitations to generate leads.

The key is consistency

  • Post at least once a day. Mixup your content – promotional, valuable, video, factual
  • Invite 30 targeted people / day to your network – your “ideal client”.
  • Follow up regularly, use all areas of LinkedIn to build relationships

Strong Content = Strong Brand

Asset management brands have the ability to post updates, but the individual fund managers at these companies can push their content by publishing long-form articles on LinkedIn. Unlike Facebook or Twitter, LinkedIn is designed for users to post in depth articles that inform and educate. To be considered an industry expert asset managers need to write over 1000 words on a subject. This sort of content isn’t compatible with Twitter or Facebook, so promote it on LinkedIn. (For assistance with blog / article writing, click here)

The above are just a few of the many strategies that asset managers have to adopt to keep pace with the global changes taking place in the investment domain. Success factors will vary across different demographics and geographies. Social media has become an essential channel for digital marketing. Asset management brands and individual asset managers who utilise social platforms reap the benefits. However, the decisions and actions that asset managers adopt in the present scenario—and the capabilities they develop—are very likely to influence the realm by driving its performance in the years to come.

For bespoke social media marketing advice to take full advantage of the opportunities available to you via #LinkedIn, schedule an initial phone consultation here:

To pay or not to pay? That is the question

To pay or not to pay? That is the question

Research reveals that of 70% financial advisors are using social media for their marketing purposes, 90% use LinkedIn as their primary marketing platform. Research also reveals that one-third of such financial advisors generated $1 million or above in Assets Under...

Shhh – Why Noone in Finance is Talking about Growth Hacking

Shhh – Why Noone in Finance is Talking about Growth Hacking

Many of you won't even know what growth hacking is and it conjures up something illicit, dirty and ugly. Growth hacking, a recent brand growth concept, is the method of achieving accelerated growth through the application of different marketing techniques. Growth...