Just as AUM can be affected by external factors and internal decisions, so too can an asset management firm’s brand, and in today’s faster-than-immediate client feedback loop, reactions can impact value before a firm has a chance to pivot. To continue the topical arch started earlier this month, this post will explore how the value of a brand fluctuates based on how well it is presented in the public arena, especially across social media channels.
Characteristically Analogous, Positively Correlated
A recent engagement survey by eVestment listed the top-five most recognized asset management brands with more than $100 Billion in assets as Wellington Management Company, BlackRock, J.P. Morgan Asset Management, Lazard Asset Management, and PIMCO. However, this elite level of recognition has its benefits and detriments since inflows and outflows are directly impacted by how positively or negatively a brand is perceived—in other words, which firm clients believe will not only be steadfast when global economic conditions are good, but also when, as in the case with the recent turmoil over Brexit, the environment is most volatile. Lastly, the overall, day-to-day operational integrity of a firm plays a large role in its brand value; any unethical practices or behavior from managers can quickly tarnish a reputation.
“For firms with the strongest brand awareness, the effects on flows get magnified to a large extreme,” said Michael Magnan, senior analyst at eVestment. “On the one hand, they have far more positive flows than firms with lower brand awareness. But it’s clear this is a double-edged sword—outflows are almost five times higher than the positive inflows for firms with the most brand awareness. So it can hurt you as much as it can help you.”
With the existence of such a positive correlation, it’s critical for a firm to fully understand the power of its brand so not to underestimate the effect of a high-profile departure, for example. Because of this potential consequence, some firms operate several smaller brands underneath a larger, more recognizable umbrella in order to insulate the latter from any adverse news.
At the Forefront of the Conversation
As was discussed during a marketing strategy session at TSAM New York, social media is now being utilized by firms like Eaton Vance and Legg Mason as an avenue for continued client engagement and brand management. In a world of eight-second attention spans, changing demographics, and evolving investment behaviors, social media platforms provide firms with an opportunity to grow, monitor, and protect their brands at a pace comparable to that of the industry’s changing competitive landscape. Once again, it is important to note that as quickly as a brand can leverage social media to make positive headway and yield asset inflows, it can destroy trust and deter potential clients if best practices are not exercised.
Regarding the execution of brand management through social channels, Courtney Fischbach, vice president of social media at Legg Mason and panelist at TSAM said, “No one has a locked down strategy—you have to just try something and see if it works. Some people in our industry think that social media is going to go away, but it isn’t.” This reinforces data from Greenwich Associates that found one third of institutional investors use social media as a research tool, and Fischbach thinks that number could even be higher. Often leveraging longer form, anchor content like whitepapers, her team distributes fragments from and teasers for them across YouTube, Twitter, Facebook, Instagram, and LinkedIn, treating each platform independently. Some additional insights from Fischbach include the following content/audience targets:
- LinkedIn: Professional, thought-leadership shares for institutional investors
- Facebook: Community-centric, behind-the-scenes posts for retail investors
- Twitter: Firm or industry news leads for financial media
- Instagram: Fun, playful pictures and videos for everyone
Regarding the industry shift towards short, engaging forms of content rather than the lengthy research pieces that have traditionally expanded a firm’s reputation and brand, Fischbach, unintentionally echoing the research on shortened attention spans, asked, “Who wants to read a whitepaper when you can watch a 15-second video?”
Throwing Compliant Spaghetti Against a Wall
The content consumption methods for both retail and institutional investors are rapidly and substantially changing. Because of social media, managing and boosting a firm’s brand in an incredibly dynamic and hyper-competitive market can be done faster and more effectively than previously possible. With this broad creation of content and greater exposure to clients, caution over what is disseminated and who disseminates it exists, but by working with compliance teams and understanding that with greater awareness comes sharper reactions, a brand can yield returns just the same as any asset.