To: Hedge funds, private equity. Subject: Welcome to our world.

sonowyou.pngSo now you can advertise. I guess that means you're going to run right out and wallpaper the Wall Street Journal, buy out CNBC, and flood Yahoo! Finance with banner ads, right?

Whoa! Slow down, sailor. You can't just throw out some ads and expect the big bucks to start rolling in. Just because the SEC finally approved general solicitation for private investment funds doesn't mean you need to start dominating the airwaves.

Investment marketing is more complicated than that. Mutual funds have been advertising for years. They've learned that for investment ads to work, they need to be part of a broader marketing mix. You need to patiently build your reputation, find an appropriate balance of brand-building and direct selling, and gradually find the mix that gets the best results for you.

We ought to know. Wechsler has been helping investment marketers sell their products and build their brands for more than 25 years.

The Oldsmobile of investment vehicles?

olds.jpgRemember that ad campaign about "not your father's Oldsmobile"? We were reminded of it yesterday when FINRA, the brokerage industry's self-regulator, alerted investors  that "alternative funds are not your typical mutual funds."

We'll let the investing experts debate the pros, cons and how-tos of liquid alts. But we find it more interesting to ponder what this says about mutual funds in general. Are they in danger of succumbing to the Oldsmobile syndrome?

With 20-20 hindsight, the Oldsmobile campaign was one of the biggest disasters in advertising history, killing off what was left of the car's dowdy brand:

“This is not your father’s Oldsmobile” became a national catchphrase, while reminding the world that the car was driven by exactly the kind of people its name suggested.

Mutual funds have also begun to feel like a tarnished brand in some quarters. ETFs, separately managed accounts, hedge funds, commodity pools and other trendy investments have been garnishing publicity and gaining market share, often at the expense of mutual funds which are starting to feel stodgy and dated.

Enter liquid alts. By repackaging the sophisticated techniques of hedge funds and other alternative investments, they are restoring some glamour to the category. Or maybe not--because the familiar long-only stock, bond and balanced funds are now lumped together under the label "traditional mutual funds."

Is this good or bad for the industry's brand? On the whole, we think it's good. Mutual funds are a flexible, investor-friendly vehicle that can accommodate a lot of different investing "content." Liquid alts are more likely to reinvigorate the brand than kill it off.

Is there still a place for "singles hitters": Pro vs. con

/Babe_Ruth.jpgOne of the hoariest clichés of investing is the money manager who hits singles and doubles rather than swinging for the fences and taking the risk of striking out. I can't begin to tell you how many portfolio managers have described their investment philosophies to us in those words.

But is there still room for these singles-hitting, benchmark-hugging, stylebox-constrained "closet indexers" in today's investment world? Two prominent industry observers are taking opposite sides of this argument.

This morning's Investment News cited Scott Burns of Morningstar as saying that low-cost active ETFs could prove the salvation of benchmark-driven managers whose relative returns are otherwise eroded by fees. "They need every basis point they can get," Burns said.

Taking the opposite view is Ben Phillips of Casey Quirk, who recently wrote that industry assets will increasingly concentrate among firms that can demonstrate one of four winning value propositions: high-return active management, cost-efficient indexing, asset allocation expertise or solutions-led distribution. There's no room in his brave new world for managers who charge active management fees for index-like returns.

Our own experience tells us that long-only stylebox managers, while not yet an endangered species, are struggling. More and more are turning to alternative products or prepackaged solutions. In fact, it's not clear that the industry's shift in the 1990s and 2000s toward "institutional-style" investing, focused on relative rather than absolute returns, was ever a good fit for individual investors with real-world needs and goals.

Will today's new investment products provide better answers? Only time will tell, but at least the industry appears to be asking the right questions.

Is rebranding really news?


OppenheimerFunds happened to announce its "new brand" last week at the same time the mutual fund tribes were gathering at their largest annual pow-wow, the General Membership Meeting of the Investment Company Institute (ICI) in Washington DC.

I hesitate to call it a new brand because it appears to be basically a redrawing of the "four hands" logo with some updated typography. (There's certainly more to it than that, but we're not privy to the internal documentation.) The new mark has greater depth and dimension than the old—which incidentally goes counter to the supposed flat design trend reported breathlessly in The New York Times a few weeks ago. OppenheimerFunds's press release described it as a "multidimensional and transparent evolution":

The new look and feel demonstrates our belief in providing greater transparency for investors that operate in an increasingly multidimensional world, and acknowledges that it is no longer enough for asset management firms to simply view the world through the lens of our own industry.

Well, you can take that for what it's worth. Everyone has to come up with a design rationale. The mark itself drew mixed reviews; there were plaudits and there were pans. But at the ICI convention, the biggest reaction we heard was, "Is that all?"

Which brings us around, at long last, to the title of this post: Is rebranding really news?

Typically, a logo redesign is of interest largely to internal audiences. The outside world doesn't really care. Of course, the redesign is intended to have an impact on the outside world by changing how the company is perceived, but that's not supposed to be a conscious process. It should happen subliminally. There are always some companies with such high visibility (like Apple) that the general public is interested in its design, but normally the only outsiders who care are other design and marketing professionals. In fact, if you follow this logic, you probably shouldn't even announce your design changes externally, so they can impact the intended audiences without their being aware of it. But few companies would accept such a radical proposition.

A more newsworthy change, in our view, was the concomitant renaming of OppenheimerFunds's institutional division as OFI Global Asset Management. Apparently, the institutional folks got tired of constantly explaining that they aren't a mutual fund company. What they may not realize is they'll spend the rest of their lives explaining that OFI stands for OppenheimerFunds, Inc. That's the problem with initials. (Just ask KFC.)

Of course, what would really be worth announcing would be the separation of OppenheimerFunds into two words with a space between them. But we'll have to keep on waiting for that one.

Brand or performance? Yes.

We were particularly struck by one chart in Ben Phillips's excellent presentation at the MFEA Strategic Summit this morning.

According to Casey Quirk's analysis, an asset manager's investing brand is as important as its performance in attracting investors. Specifically, firms with high perceived performance but low actual performance grew just as quickly as firms with high actual performance but low perceived performance.

Of course, those firms whose brand and performance were both strong did best of all. Not even close. 

How responsive are asset managers?

When it comes to their websites, not very—yet.

Royce FundsWe noticed last week that Royce Funds launched a new website using responsive design. According to the The Blog Starter it's only the second responsive asset management site. We surveyed 70 corporate sites earlier this year, and only Delaware Investments was responsive at the time. 

Responsive design, if you haven’t heard, is a way of coding a site so it responds to the size of your browser window. Whether your visitor is using a desktop computer, laptop, tablet or smartphone, a responsive website will automatically change its layout to deliver the right information, in the right format.

It’s been all the rage in geek circles since it was introduced two years ago. Based on the great job done by Delaware and Royce, and conversations we’ve been having with other asset managers, we think you’ll be seeing lots more of them very shortly. 

Hedge fund advertising? Horse, meet barn.

Just yesterday, some members of Congress complained that the SEC still hasn't approved new rules allowing hedge funds and other alternative managers to advertise to the general public—even to investors who aren’t qualified to buy their products.

Someone should let them know this particular horse has already left the barn.


Alternative investments are already widely marketed to individual investors through mutual funds and ETFs with low minimums and daily liquidity. Joe Six-Pack and Jane Chardonnay can invest in everything from long-short equities to managed futures to merger arbitrage—just not through the private funds that are the exclusive domain of wealthy investors and institutions.

In fact, “liquid alts” are the hottest products in the mutual fund business. While they were pioneered by smaller managers and niche fund families, just about all the big players are now jumping in. These nontraditional products, which appeal to investors disaffected by style-box funds that didn't protect their capital during the crash, are profoundly changing how Americans invest—and how mutual funds are marketed to investors.

Wechsler has just published the latest in our series of “elevator papers”—white papers on investment marketing that are short enough to read on your way up—on this subject.

Bon Voya


Remember those funny ads where someone sat on the "ING bench"? You initially thought ING was just the end of a longer name, but then he/she stood up and it turned out that ING was the whole name itself?

Those name-recognition ads were one way to overcome an awkward name. Now ING has come up with another: get rid of it altogether<. 

Of course, the real reason for the name change is that the U.S. insurance/retirement/investment firm is being spun off by its Dutch parent as a separate company through an IPO later this year. But if they can get rid of that albatross of a name at the same time, more power to them!

They've done more than that; they've come up with a fantastic new brand. At the risk of sounding self-serving (full disclosure: ING Investments is a recent client), this is one of the best new names I've seen in a career of branding. Why? It's short, sweet and snappy. It has positive connotations. The whole idea of a "voyage" is a great mental image for a financial services company. And most importantly, it sounds like a real word. Unlike so many artificial-sounding names that companies come up with it, Voya rolls off the tongue. 

They've done something else that's smart, too. So much of the old ING brand is tied up in the color orange, and they've kept that color to maintain as much continuity as possible. Cleverly, they're shifting from name recognition to color recognition in a new ad campaign about "orange money" that will bridge the gap until the new brand is launched next year.

What the hell, I even like the logo. And this photo: the enthusiasm, the sense of voyage, the orange car, and how her v-shaped arms mimic the shape of the V and Y in the logo.

Great job, Voya. 


Vive la différence (among financial advisors)

You can buy Philly cheesesteak in Portland and Buffalo wings in Bakersfield. Starbucks tastes the same in Detroit and Dallas. Even Brooklyn's legendary accent is vanishing from its increasingly upscale neighborhoods.

So it's nice to know that distinctions between different kinds of financial advisors haven't yet disappeared.

A new study of investment product brands found sharp differences across distribution channels. Vanguard topped the list for RIAs, iShares for wirehouse brokers, Franklin Templeton for independents, and American Funds for insurance and regional brokers. Only PIMCO and Blackrock made the top ten list for all five channels.

Is it nature or nurture? That is, are these differences due to actual advisor preferences or how each channel is treated by fund marketers and wholesalers? Ignites seems to think it's a little bit of each [sub. req.]:

For example, a firm may focus on the wirehouse channel and strategically avoid regional broker-dealers. On the other hand, the findings could indicate, just maybe, that there remain meaningful differences in advisor preferences and behavior across channels.

We don't pretend to know. But we're happy there's still a difference to debate. Here are the lists:



Why design is becoming more, not less, important

This week's Forbes had an interesting piece about the central role played by graphic design in the success of Morningstar (via MF Wire):

Joe Mansueto, who founded the business in 1984 in his one-bedroom Chicago apartment, made graphic design a discernible driver in delivering on the company’s initial goal: to simultaneously demystify and enliven mutual fund analysis—with its massively complex, mind-numbing financial data—for individual investors.

Why was this so revolutionary? Industrial design has long been a driver of successful products from cars to smartphones. But the role of graphic design in selling information-based products is something new and different. And as we enter the information-based economy, that role will only continue to grow.

My late partner Arnold Wechsler used to say that when it comes to financial services, the information is the product itself. There's nothing tangible to touch or feel. There are no tires to kick. So you have to distinguish your product by the quality of information and how you present it. Design is often the differentiator.

When I started in this business a few decades ago, hardly anyone other than designers themselves even knew what graphic design was. Today, it seems like practically everyone you meet is a designer. The growth of graphic design has paralleled the growing importance of information in our lives. There's no turning back.