The JConnelly Blog



Written by Ray Hennessey
on December 13, 2017

People standing in line- Don’t Let the Complexity of Your Fund Cloud the Simplicity of Your Message.jpg

Want to know the No. 1 mistake most asset managers make when explaining their funds or ETFs?

They revel in complexity instead of selling simplicity.

If someone asks you what time it is, you shouldn’t tell them the history of Switzerland. Yet, that’s what too many marketers in asset management do. I spoke recently at the ETP Forum about the need for differentiation in a crowded ETF space. Many products come to market and fail to generate any attention (or, more importantly, assets). It’s no wonder: Every six months, more than a hundred ETFs are launched, bringing the total as of the end of the third quarter to 2,048 products, valued at more than $3 trillion.

With so much competition for attention, you need to stand out. That’s where differentiation comes in – and where so much messaging goes wrong. Just because you are different doesn’t mean you need to be more complicated. It’s always best to take an Occam’s Razor approach: the simpler your explanation, the better.

What does that mean in practice? Here are some points to think about when creating a simple, differentiated message for your brand:

Give People One Reason to Do Business With You

There’s a phenomenon called the Paradox of Choice that holds that, when faced with too many choices, people make none. The fewer reasons you argue for someone to make a decision, in this case an investment, the more chance you have of getting their assets. In 1978, a Harvard professor conducted a famous study called the Xerox Experiment. In it, a woman asked to cut in line to make copies. When she simply asked to cut in, the line let her in 60% of the time. But when she gave a reason (“because I’m in a hurry”), that percentage jumped to 93%. All people need is one reason to invest with you. Don’t overcomplicate it.

Know Your Audience

If you want the message to resonate, you have to put yourself in the shoes of the people listening to it. In seminary, they teach future priests that the worst kind of sermon is the one about how know one goes to church anymore. Why? Because you’re delivering the message to the few who actually bothered to show up that Sunday. That same is true for asset managers. If you’re targeting a product for short-term traders, don’t muddle the message with how it’s great for retirement planning.

Tell a Real Story

People throw around the word “narrative” a lot, but it’s just a fancy way of telling a story. There is a reason you started a fund or launched an ETF. Somewhere you saw a market need and perhaps – even better – an investment theme that was overlooked by the market. That is what the startup world calls the “origin story.” It’s that eureka moment that spawned all the thinking and hard work needed to launch your product. Asset managers don’t use that enough when it comes to marketing products, but they should. Building a story around why you started the fund gives potential investors insight about who you are and what you believe. That is the basis for a strong brand, which will help you in selling individual products.

Complex products can have simple stories. If you want to stand out, stop focusing on all the bells and whistles and start promoting the simple harmony your fund or products provides to the investor base. That’s a much sweeter tune to investors’ ears.

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