10 Common Mistakes That Make Smart Investment Managers Look Naive - Part II

(Click HERE For Part I)

6. Employing a “sophisticated, systematic and repeatable” investment strategy but an undisciplined and discretionary marketing strategy

 “I did PR once. It didn’t work.”

  • One client’s comment during a brand development discussion

Imagine scrapping your entire investment strategy every time a trade doesn’t immediately go your way? Just like investing, marketing requires a strategy, consistent execution and commitment.

7. Not having a content marketing strategy

You know the joke…”How do you know if someone went to Harvard?...They tell you.”

We all want to be viewed as “smart.” But it’s not something you can just say.

The better approach is to show me how smart you are instead of tell me. Demonstrate your brilliance by becoming a thought leader. One great way to do this is via a content marketing strategy.

It entails an occasional thought piece, blog post, white paper or even just curating other people’s content and then publishing it. Not just on your website, but also on external content platforms like Harvest Exchange or LinkedIn. Sites like these exist as destinations for sharing knowledge and provide access to potential new audiences.

8. Playing “hard to get”

Even managers that want to be perceived as ‘hidden gems’ are beginning to realize that being found is a LOT harder than it sounds. There are way too many competitors.

Being the secretive alchemists hidden in a dark corner is not what it used to be. But…unless you are willing to go “all in” on making your presence known, don’t expect a big ROI on a half pregnant marketing strategy.

9. Insisting that a web presence is unnecessary (or that an unprofessional looking website is okay)

Now you are just being stubborn. The world has changed - accept it. Digital tools really do provide the biggest bang for the buck in shaping perception and disseminating information.

Few institutional investors will give you money without ever visiting your office. But…which office will they visit first - your virtual one (your website) or your real one?

Too often managers are so caught up in appearance around passing operational due diligence that they fail to realize how hard it is to ever get an investor to come to their office in the first place. Considering the steps an investor is going to take in the overall diligence process, having a weak website or no web presence at all in 2017 is just nuts.

10. Blaming compliance for using 20 year old marketing strategies

We are in a highly regulated industry. Restrictions exist on what you communicate, how you communicate, to whom you communicate and when you communicate. No doubt, there is a lot that you are not allowed to do. We get it.

But there is also a lot that you can. Many of the biggest managers that target the same institutional investors that you do and have to manage under the same private placement rules that you do seem to understand that.

If your GC or CCO is telling you that you cannot use modern, digital tools to communicate, then get a second opinion. Better yet, get a new GC.

BONUS: Selectively quantifying ROI on non-investment activities

We are often asked to provide an expected ROI in terms of AUM growth on a video or marketing campaign. Always a good question to ask – albeit poorly phrased.

Implicit in the question is the recognition that marketing is an investment. Marketing in a long sell-cycle business is always an investment. Also implicit in the question is that there is perfect correlation between marketing and AUM growth. That is a bold assumption. It is a bold to assume that perfect correlation exists between performance and AUM growth (otherwise, why would any manager below the top decile ever have money?). Both are essential contributing factors, but neither on their own, is sufficient.

To put it into context, ask yourself, what is the ROI on office space at 57th and Madison in Manhattan? No arguing that location is important - but go ahead and try to quantify it. Now try to quantify the opportunity cost when comparing office space at 17th and Madison. How about 17th and Madison in Milwaukee for that matter? All things being equal, we know which space the market considers most valuable (the price tells you that), but it’s impossible to say how much more AUM you will raise by choosing one location over another.

The right metrics to measure ROI are those that can be directly influenced. For marketing in the alternatives space, that comes down to audience growth, engagement and retention. All very measurable outcomes.

Bottom-line… getting your message to stand out is hard.  Avoiding the common pitfalls that others make in their marketing and messaging is a good start. The biggest pitfall is simply thinking that the way it is done by everyone else is the way that it should be done.

If there is ever a place to be contrarian in your business, it is in your approach to marketing.

Click HERE for Part I.

By JD David