New Year's Resolution: Get "Discovered" in 2010

by Dan Sondhelm

The end of the year is quickly approaching. Now is the time to analyze where you have been and where you want to be next year. Ask the following questions: How strong was your 2009 performance? How solid was your distribution strategy? Are you struggling to attract the attention, recognition and interest from investors you deserve? If your New Year's resolution is to get discovered in 2010, then this article is for you. There are opportunities for smaller, boutique-type firms to earn their share of assets. But, you should start developing your strategy now.

The challenge.

Most mutual funds with significant assets grew as a result of proactive selling activities. An individual fund is rarely "discovered" on its own. With more than 10,000 funds available to investors and their advisors, competition for share of wallet can be fierce.

Gaining visibility - and then sales - requires commitment. Often, smaller firms have limited brand recognition in the financial intermediary, yet must compete for that attention with firms who pay for preferential treatment. In addition, many fund firms spend significant dollars for their marketing activities both in the advisor market and at the retail level. For the larger, established firms, this can include TV commercials, glossy magazine style annual reports and sponsorships at major public events and venues. These efforts create name recognition and loyalty. As a result, the biggest keep getting bigger - with 80-90% of fund flows going to the top 20 firms.

Some investment professionals may only use funds that are on recommended lists from their home office or research groups. These preferred designations may also include diversified portfolios made up of a handful of the recommended funds to make the advisors life easier and theoretically more successful. In other cases, investment professionals do their own homework to select the funds and investment products they will use with clients using screens and/or qualitative issues such as wholesaler support. While a fund is small, it may not make many of the screens. Wholesaler support, as well, may be thin.

Performance is only a part of the equation.

Unfortunately, mutual fund investing by some investors and even advisors is predicated on chasing performance. So while performance can get a fund recognized, performance chasers will drop the fund for the next hot item if they don't really understand the investment philosophy or know the fund manager well.

While performance is of course important, the financial advisors and clients that will remain loyal are those that understand that adherence to your discipline in all market conditions is the essential ingredient for long-term success. There are advisors who specifically search out undiscovered funds, but they need to hear a compelling story that makes you stand out and helps them understand why your fund is the "hidden gem."

So how do you get discovered?

Do you want to make 2010 your best year ever? Start by developing a written strategy. Ensure you have buy-in from management and a commitment to the resources it will take to implement. Accountability will make or break your program, so predetermine an "owner" for every initiative and how it will be tracked and measured. Include sections on each of the following:

Product

• Continue commitment to excellent performance.
  
• Set competitive pricing - below 1% is ideal; depending on your asset class, 1.3% may be as high as you can go and still be sellable while building recognition, Yes, that means you may want to subsidize your funds with revenues from separate accounts.


• Make sure you are in the channels that make sense for your fund. Be aware that many experts predict that the C-share will soon be obsolete, so take a look at your share classes.

Platforms

• Make sure you are on the major platforms including Schwab, TD Ameritrade, Fidelity, and Pershing.


• Establish a relationship and work regularly with the research teams to get and stay on their radar. In some cases, for example at Fidelity, there may be two separate groups with different criteria.


• Take advantage of marketing opportunities offered by some platforms. Develop a strong relationship with your account manager so you are alerted and aware of opportunities for proprietary mailings or sponsorship opportunities at local and national events.


• Look at the daily and weekly sales data offered by the platforms so you can track which advisors are buying and selling your funds. Communicating with these advisors is essential.

Investment Philosophy

• A value shop, growth shop, GARP, or disciplined, (even if you are highly disciplined,) is not a sellable story. Bring it to life. What make your strategy different than your competition? How do you select stocks? What are interesting themes in your portfolios? What good decisions did you make? Then, use the messages in all of your touches with customers and prospects.

Be Proactive

• Provide timely information on your Web site. Regularly post themes about your fund and the good decisions you made. If your site doesn't allow you to add timely information, upgrade it. Advisors won't come back if there is nothing new.


• Engage the media. Let the financial press sell you. Then leverage the third-party endorsed reprints in your other sales and marketing efforts, in print and on your Web site.


• Be accessible. Advisors want to be able to communicate with the portfolio manager directly. Quickly respond to advisor calls.


• Showcase portfolio managers in quarterly Webinars, then post the event to your Web site.


• Drive advisors to your Web site with a monthly Email marketing program to tell your story. Strategy and performance are just two key areas for content. Others include news media reprints, promotion of upcoming Webinars, attendance at an advisor conference, etc.

Can't afford a wholesaler? Try "wholesaling" the media.

The news media is a very powerful way to spread your story. And, it may be one of the most cost-effective ways to get the attention of the advisor and retail markets. There are tremendous benefits from appearing in the media on a regular basis. Each time your portfolio manager is interviewed, it adds a layer of credibility and status to your firm.

Cultivating relationships with the media often results in being looked to for quick quotes in your area of expertise. Whether proactive or reactive, press mentions are perceived as third party endorsements of your process and product. Smart marketers repurpose these press mentions as reprints and Web links to maximize their impact. This visibility is likely to be rewarded by new leads, selling agreements and larger tickets.

Call us at 703-894-1046 for a free consultation to discuss how SunStar can help you get discovered in this competitive environment.