HFMWeek: Anthony Payne on branding
Hedge fund managers might like to think of branding as being about Rolex and Hermes. But brand identity is as important to financial companies as it is to up-market retailers. Branding is about engaging with a fund’s target audience in the right way and differentiating it from competitors.
There is a tendency to think of branding as a logo, or something that only applies to advertising, but it isn’t. Branding is about identity and what a firm stands for and should be the foundation of any communication with audiences. Put simply, it is the sum total of associations that people have with a company.
Building a brand identity requires creating a consistent image and character that can be used in a media and communications. A brand identity is not about look and feel, but about character and tone of voice.
Different communication channels can demand different ways of communicating, but the tone of communication and the messages that inform everything that a firm says will remain constant.
Funds need to show that they have a positive, robust reputation, demonstrate a deep-seated, principled corporate culture and communicate this in a clear and professional manner. A programme to build a strong brand identity can achieve this. Creating a positive image and character that is rolled out in all communications can help a fund manager heighten name recognition and credibility.
In recent years, a fund’s reputation has become a primary consideration for investors. Performance alone isn’t enough to get allocations. What firms too often forget is that communication is a two way street. Customers need to be able to trust what a company says – particularly a company engaged in investment. Consistent messaging that hails from a strong foundation provides that consistency.
Companies must also respect their audience’s intelligence. This is particularly key in crisis communication situations. Never underestimate the audience: once trust is lost, it’s very hard to regain it and trust is important for brand equity. By contrast, a strong brand identity can help fund managers weather setbacks by allowing them to draw on a reservoir of good associations already in place.
Recent surveys of US and European institutional investors find reputation has become a primary consideration when choosing a hedge fund manager. And with institutions now representing up to 70 per cent of hedge fund allocators, the demand has increased for high-level communications that speak to a sophisticated audience.
Hedge fund managers are now beginning to grapple with branding. One of the catalysts for this is the fast growth some have enjoyed – growth that has taken many from their origins as entrepreneurial financial boutiques, dealing with family, friends and high net worth individuals, to something resembling banks, dealing with pension funds and insurance companies. In the process the founding culture that was the original driver for the business, and which served to attract talent from the banks.
Regulation also plays a part, whether regulation by governmental or the industry itself. Alternative and traditional asset management is slowly but surely merging under the pressure of market force. This presents a challenge for hedge funds which only a strong brand identity can overcome. The brand and the marketing of the brand – which could mean a lot of things –are central to the growth of business.
These evolving value propositions require both internal and external communication. It is essential to gauge staff perceptions and develop internal messages, as well as conduct perception research and exit interviews to help fund managers hone propositions which differentiate and position – and push emotional hot buttons with target investor groups.
A recent industry survey of fund managers found that after performance, clients had stuck with them based on a string of intangible values such as “reputation, integrity, trust, experience, pedigree of the principals, relationships, and philosophy.” Not the easiest things to define, package, and promote. Yet that is the challenge now facing hedge fund managers and is essential to grasp it to continue growing, expanding and gathering allocations.
Anthony Payne is the founding partner and CEO of Peregrine Communications, A London-based financial public relations group.