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| Melissa Murphy, George Young, Craig Hodges, Bob Auer |
Q. How important is it to commit to growth, and at what point do your recommend you do it?
A: Auer: Immediately, you can't wait to get your fund off the ground. We got started 60 days before our launch getting our message honed and participating in media training. We have never regretted it.
Q. Tell us about your decision and process to growing the firm?
A: Hodges: With five research analysts, we are committed to research, following 1000 stocks, the industry and the market. We had difficulty marketing a multi-cap approach to advisors, since they prefer to run their own asset allocation. So we made a decision to carve out the classes into separate funds; each follows the same overall process. As asset classes go in and out of favor, we have the ability to showcase a product that advisors are interested in as a discussion starter.
Villere: Let me share some before/after scenarios to address this question. We make stark adjustments to our marketing approach:
Before: rifle-shot, new clients came through referrals, word of mouth and would make multiple calls to one person. After: shotgun approach, media, blast emails; Before: worked with individuals. After: marketing to advisors; Before: mailers, expensive printed pieces plus postage. After: strictly emails; Before: conscious about maximizing margin. After: using platforms, realized that half the profit was better than nothing; Before: local marketing in newspapers, events. After: national media, CNBC and many more.
Q. Share
with us your philosophy on expenses.
A. Auer:
For us, expenses are one part of our five pronged approach. Like weaving
a spider web, we don't believe you can be effective doing one or two. We also
believe there's a logical order to our approach.
1. To successfully market a fund, you have to have a story
-- one that is special and unrepeatable by others.
2. Fees have to be relatively high, yet fair, to get the
traction needed to do other things to build visibility through programs like
PR, participating on platforms and in industry shows, and to hire a wholesaling
staff. And, if markets have a meltdown or your style is out of focus, you lose
half your fee.
3. Get the story out, widely,
through public relations.
4. Be on the platforms.
5. And you must press the flesh; think about what your form
of delivery will be. Auer chooses to go to six shows a year and to do the face
to face meet and greets. We participate in shows by Schwab, TD Ameritrade,
Morningstar, Pershing, FPA and one good regional every year.
Hodges: I
believe that if your expenses are in line with your peers and you have good
performance, expenses are not a factor. If you need to grow significantly, you
may wish to go lower.
Q. Tell
us about your strategies for leveraging technology.
A. Villere: We're still new to
this but we are planning to look into webinars. We're also new to emails, but
find them to be relatively inexpensive.
Hodges: We're evolving, too, and are doing some webinars.
Our goal is to get in front of advisors and be a value-add for them. We're
experiencing some challenges with compliance, but are trying to get our name
out as much as we can.
Q. Why do
you think advisors work with you?
A. Hodges: We have an easily understood process,
so they can see what we are trying to do. We also work hard at relationships.
Villere:
Back in 1999, we had (and still have) an investment minimum of $2000, but we
say "call us anytime," and that worried us. But, in reality, they
don't call. We find that a mutual fund is very efficient for folks to invest
with us and if someone does want to call us, we will speak with them. We are
the portfolio managers and sales persons, etc. We have skin in game and are
accessible.
Q. Each
of you are active with the press, please share some positive and negative
aspects.
Auer:
Having a good ego, I do enjoy the recognition, but in all seriousness, PR
supports our other efforts. We are excited to use our interviews from TV at the
trade shows. I had a fantastic experience at a conference when a small
circulation Morningstar interview was seen by a family office who became one of
our largest and best clients. The harder you work, the luckier you get.
Hodges: I
have a love/hate relationship with the media. Positives - It gets your name out
there. It's amazing where people see your interviews. They give you instant
credibility but you then must take advantage of it. Unfortunately, it’s impossible to directly track the impact on the funds. It
also requires a real time commitment, but we now have 5 spokespeople. The
frustrating part is that I have an agenda, but the reporter's agenda often
takes over and perhaps the interview is only 20 seconds. That said, media
appearances and interviews are definitely worth the time and effort. You can
have greatest performance in the world, but people need to know about it.
Villere: First off, you have to not mind speaking to a
group, but the challenge is the reporters may change the subject, the time,
etc. It is important to remember they want you to look good, which makes them
look good. I try to come up with a pithy sound bite, not a financial lecture,
that's what they are looking for. We've also found that press begets more press
-- meeting reporters and being available ended up landing us a feature story in
Barron’s.
Q. What's
a reasonable marketing budget for a small to medium firm?
A.
Villere: $100K/year but have a website in advance.
Hodges:
When assets grew, we hired wholesalers, researchers etc. but if assets sink,
that can cause a problem, so it’s important to know what you
can bear. We budget for marketing as though it’s
another employee.
Auer: As a one star fund, we have to prove our
worth. We spend $30K a month, right off the top. It covers trade shows, public
relations and other marketing. It’s still a struggle, but we
have been consistent. We see it as an investment.
By Katie Bird
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