3 Ways Asset Managers Will Fail to Differentiate in 2021
Growing asset management revenues is much harder than it used to be. The number of asset managers and strategies have proliferated in recent years. However, the number of consultants has shrunk, leading to a notable decline in available mandates. In this fiercely competitive marketplace, even firms with a solid track record of performance will struggle. Asset managers which master the marketing process and effectively differentiate themselves will be triumphant in 2021.
Each year, I check in with my network of industry experts to get a pulse on the trends and best practices in asset management marketing. The upcoming year will be marked by big changes in the way marketers develop and deploy their plans. Largely, this is due to the pandemic and a shift to digital. With everyone “going digital” with their content, events, etc…, it’s going to be harder than ever to rise above the noise. Recently, I met virtually with three experts in investment management marketing. I learned what asset managers should avoid if they want to differentiate and gain assets in the coming year. Here are three things asset managers should avoid if they want to differentiate in 2021.
1. Thought NON-Leadership
This is the opposite of thought leadership. If you aren’t sharing anything new or different, it’s very difficult to cut through the noise. As the COVID-19 pandemic, social unrest, and other events have roiled markets — or left them expectedly unchanged — investors have been craving content that helps them gain perspective. Yet, we’re in a time when in-person conferences, meetings, and events are out of the question. Companies have far fewer avenues to share insight or showcase investment expertise. “Some asset managers quickly distinguished themselves as the go-to sources for real-time market insight during the early stages of the pandemic,” explained Scott Wentworth, founder and head writer at Wentworth Financial Communications.
Unfortunately, it was just a matter of time until seemingly every asset manager was publishing similar content. As Wentworth points out, providing similar takes on the same news is not thought leadership, and it won’t do much to make you stand out. “The opportunity now is to add something unique — and uniquely valuable — to the conversation,” continued Wentworth. Identify ways you can advance the conversation by addressing common misconceptions in the marketplace or answering questions that others haven’t explored. Consider narrowing your focus, so you can explore a topic more deeply than others have done. Provide rare insight by drawing on your firm’s unique experience. Or take — and defend — a view that is contrarian. This type of differentiation from asset managers will enable their success in 2021.
2. Generalist Limbo
Don’t get stuck in a generalist rut. AUM data over the past several years clearly indicate that generalist firms have been stagnating. This trend is expected to only accelerate, as large asset management firms continue to find success with strategies to grow AUM and strengthen their product offerings by acquiring select specialty firms. In today’s market, unless you are known for something specific, you risk being perceived as just a smaller and less-resourced version of the really big players.
“Specializing helps you remain competitive in the eyes of potential investors, as well as potential partners,” said Dan Sondhelm, CEO of Sondhelm Partners, a firm that helps grow asset managers. A specialty can be any number of areas, including an investment category (ESG) or value-added services (helping advisors grow), or a strong network of relationships in a particular channel (consultants). Being a specialist doesn’t mean you can’t grow and diversify, but you need to know and double-down on your strengths. Then, focus on your expansion to maintain your positioning in your specialty. “Start by defining what makes you different. Then, spell out a clear story to position yourself as a leader in that space,” advised Sondhelm. So, asset managers, identify a way to differentiate in 2021 and you will stand out.
3. Data Bottlenecks
If your data process isn’t streamlined – 2021 is the year to fix it once and for all. In large part, data fuels sales and marketing efforts. The faster you can put clean, accurate data in front of your audience, the better your chances of closing deals and increasing inflows. And just as important as speed is data governance — establishing ownership and accountability within processes. Poor data quality and availability will ultimately mean higher costs and reduced competitiveness. Yet, many firms still have inefficient, ad hoc processes for collecting, storing, and distributing source data that populate marketing assets.
“Recognize that fast, accurate data has become an important differentiator,” advised Robert Juergens, CTO, Synthesis Technology. Firms can differentiate by making strategic investments in cost-effective tools. These may include data and content automation solutions. This will allow them to quickly create and update essential marketing collateral and maintain robust data governance throughout processes. “In today’s pressure-cooker environment, firms simply can’t afford to let error-prone data collection/usage dull their competitive edge,” said Juergens.
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