With assets continuing to fall, mutual fund companies are looking for new ways to cut costs, and outsourcing the promotional and public relations aspects of marketing is one of them, and the movement could become permanent, according to a report from Optima Group, “Surviving the Crisis in Asset Management.”

According to the report, fund companies expect their net income to fall by an average of 40% this year, and Optima believes that outsourcing marketing can reduce that cost between one-third and half.

Besides reducing costs, outsourcing gives fund companies flexibility to “either ramp up, or ramp down, marketing depending on shifting market conditions,” said Dennis Dolego, director of research at Optima.

Fund companies are also reducing their external wholesalers and relying more on internal salespeople who use the web to conduct sales.

“We have seen a severe drop in assets in the first quarter, and funds will have to make dramatic changes in the way they do business to address these issues,” Dolego said. “Cutting staff where there is room, freezing bonuses and incentive pay are short-term solutions. This rationalization of marketing efforts is part of a longer-term change that will affect the industry.”

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