Asset managers are thinking hard about distribution opportunities in 2018 and the role of their brands. Cognitive science looks at how the brain interprets marketing and to some extent this boils down to a battle of ‘head’ versus ‘heart’. Do consumers make decisions based on an emotional response or do they make totally rational decisions? People are skewed in different directions but we all do a bit of both.
This is especially important for investing for two reasons – investing is complicated and the future is uncertain. The brand represents a promise which is based on reputation (in part, past performance) and the intangible element of what the brand delivers to the client (including future performance).
Last weekend, the GARS fund was labelled as too complicated for retail investors by Alan Miller. Arguably the brand has opened itself up to criticism by articulating the intangible element – “cash +5% p.a., gross of fees, over rolling three-year periods”. But when the tangible bit of the brand is very complicated to communicate, there are few options left to the marketing department.
The Woodford brand is also getting flak. Poor performance has dented the brand value that Mr Woodford himself has accrued, and some question his ability to run both the company and the money at the same time. Others ask whether his use of unlisted companies is significantly different from his tried and tested formula at Invesco.
Furthermore, a ‘patient capital’ philosophy has an emotional attraction to many investors, but the head takes over when that approach is compromised by liquidity issues.
What asset managers are realising is that a ‘patient capital’ approach is also relevant for brand value.
We will discuss distribution opportunities for asset managers at Platforum ID – the Investment Distribution Conference on 4th July. Today is your last chance to get the early bird price. Click here to register your place.