This content is from: Corner Office

The Problem With Asset Managers: One Just Blends Into the Next

An identifiable brand is essential for success — but there aren’t many to go around, according to Accenture.

Almost everybody thinks that a strong brand is an important differentiator in the asset management industry — but very few firms have them. That’s one finding from a recent survey Accenture conducted as part of a study on the future of asset management. 

“One in four marketing professionals doesn’t believe that their brand is distinct from other firms,” said Girard Healy, a managing director in the consulting firm’s asset management industry group. Ninety-seven percent of respondents to Accenture’s survey, however, said brand is essential to compete in the world of asset management. 

“Product shelves are shrinking. If the brand is not distinguishable, it will be difficult to retain your position on those platforms,” Healy said. “On a positive note, there is a laser-like focus on the client and we’re seeing hiring across industry for heads of client experience that report into the C-suite.”

The importance of branding comes as the industry is facing irreversible headwinds and firms are looking at changing up their offerings, whether that’s to meet the need for alternative investments, advice, or other new demands from retail and institutional investors.

Eighty-three percent of survey respondents said they’re developing new products and strategies and 74 percent even said they may develop non-investment products entirely. Accenture also found that “hyper-personalization” and customization will be a big part of expansion strategies.

Ninety-one percent of survey respondents said they planned to improve product distribution in the next five years. Technology and systems, however, may be a weak link in that thinking, according to Accenture. Twenty-eight percent said that “their firms have fully embraced new digital advancements such as technology platforms across the organization.”

Recently, eVestment released its brand awareness scores for asset managers in the first quarter. BlackRock and Wellington consistently scored among the highest in the most categories, while Bridgewater Associates and AQR Capital Management ranked among the highest in the alternatives categories.

Where Asset Managers Fail

The lack of differentiated brands in the industry may be even worse than the Accenture survey indicated, according to Amanda Tepper, founder and CEO of Chestnut Advisory Group. While not a marketing or messaging agency, Chestnut Advisory provides strategic growth consulting services for the asset management industry, including mergers & acquisitions advisory.

Tepper said that if people asked investors — rather than marketing professionals — to identify asset managers with a unique brand and explain what it stood for, they’d come up empty handed. 

According to Tepper, even making sure the major databases such as eVestment are complete and accurate would be a major step forward. Few managers, however, fully articulate their stories in these central platforms, which investors use to find new managers or replace old ones. 

“It all gets back to the genesis of the industry: It was all about investment performance and so if you delivered, it was thought that the rest would come,” she said. “But it’s been a long time since that was true. If all you do now is deliver outstanding performance, but can’t explain why or can’t explain the market conditions where you’ll shine or underperform, you’re not going to do well. That’s where brand starts.”

But the problem may be bigger than a classic branding story. Firms have to change the way they think and where they compete. “There are 1,000 plus different manufacturers of active U.S. long-only equity,” Tepper said. “I don’t think there are 1,000 differentiated brands that you could invent at the firm level.”

Related Content