Like all sectors, the asset management industry has been severely impacted by Covid-19. At the peak of the crisis at the end of April, PWC published a paper that pointed out that some managers lost almost 50% of their valuations.
An industry that was already struggling under the pressure of reduced fees, slow growth and regulation, has added operational strain, medicore fundraising and record volumes to its list of problems. Many firms are quite literally fighting for their survival.
While managers have been able to reduce costs to meet the changes of the last decade, further change will be even more difficult. The usual ways of building new partnerships and enforcing current relationships won't work in the pandemic.
Here's how asset managers are modifying their marketing approaches to adapt.
Embracing digital channels
Investors of all sizes are embracing digital channels while stuck at home.
Retail interest is booming as younger generations are using the crisis to invest more. Some are investing for the first time. A survey from Finder.com found three-quarters of millennials and gen-Z members surveyed planning to invest in the next year, more than double what they found in 2018.
Even more traditionally hesitant institutional investors are getting in on the action. Equity fund buyers are more open to using virtual tools and materials to make critical decisions about investments. A recent FTfm article notes managers are now becoming more au fait with digital, video and audio channels as a means to reach a broader segment of investors more widely and efficiently.
A level playing field
Digital-led marketing empowers asset managers of all sizes. While international roadshows often marginalized smaller firms who can’t compete on air-travel, anyone can build world-class digital marketing materials. A well timed and well executed digital marketing strategy can put even the smaller and more specialised firms shoulder to shoulder with firms that have well-entrenched and matured digital marketing program.
New kinds of content
More digital-led marketing means more digital roadshows, webinars and virtual fund presentations – and makes it harder to cut through the noise. FTfm highlighted MFS Investment Management’s focus on a near universal issue with a tutor-fronted webinar on “Keeping your kids on track at school”. We’ve also heard of firms running drinks evenings, casino nights and book clubs as they look to separate themselves from interminable fund presentations, strategy updates or Covid-impact economic outlooks.
Necessity is the mother of all invention
While new fund launches fell to a 19-year low in April, we’ve seen green shoots. Blackrock launched a new impact fund with a specific focus on deriving alpha from firms combating the pandemic, while Spanish insurer MAPFRE will launch a bond fund to help finance Madrid’s hospitals as it continues to fight the virus and give investors a 3% return.
ESG and “social” funds face a critical test as investors considered how committed they really are to sustainability. So far the new is cautiously optimistic. Morningstar data showed that for ESG funds based in the UK, investors drove £2.9bn into ESG investment funds in the first three months of 2020, the second-best quarter for these kinds of strategies to date. While inflows slipped in March, they recovered in April to near February levels.
It will be interesting to see how the asset management sector continues to evolve in the face of Covid adjustments. While the crisis has created a challenging business environment, it has paved the way for a modern and dynamic and marketing is an important part of this change.
Charlie Morrow is a director based in London