A financial services marketing consultant I talk with from time to time has a succinct way of stating the obvious when it comes to mutual fund advertising: What have you done for me lately?
Effective Fund Advertising
With the markets as rotten as they are, what investors really want to hear is how they can get out of this mess. Pioneer Investment Management's new ad campaign [see related story, p. 10] shows how its flagship Pioneer Fund has outperformed the S&P 500 over a 74-year period. That's one ray of hope.
But, unfortunately, the tale that Pioneer can boast to its investors is all too rare in this bear market.
It's ugly out there. Corporate fraud is rampant. International politics are as hairy as they've been since World War II, complicated by the very real threat of yet another domestic terrorist attack.
Yet, far too many fund companies are still telling investors the same old tale. You know it. You can probably speak it by rote by now: Invest for the long term.
Franklin Templeton Investments touts its Federal Tax-Free Income Fund in the September issue of Smart Money with the same old song and dance about Morningstar's Star Rating system. "A lot can happen between making your money and keeping it," reads the ad's tagline.
You're not kidding. So, tell me, Franklin, what's a Morningstar to me?
At times like these, the mutual fund industry needs to be giving investors a darn good reason to buy into them. Bluntly. Succinctly. Compellingly. Right on the money. Maybe even with a little panache.
In the rightly staid business of making people money, it's time for fund companies to push the envelope with their message. What've you got to lose? Your company's assets under management are flying out the window. And as your firm's revenue dips, guess whose budget is getting whacked? Marketing.
Fund companies should be more frank with investors. Text-heavy ads explaining investment strategy are well and good. So are the happy-speak genre of advertisements that seem to be proliferating; the ones trying to divert investors' attention away from the sickly markets to happier subjects over which they can take some control, such as saving for a child's college education in a 529. Then there's the whole new category of ads touting investing in the American entrepreneurial spirit.
But such ads were also published during the bull market.
By continuing the same message, investors think fund companies are hiding something. "They told me all about their Five-Star fund before the crash," goes the logic. "I bought it. Now it's down 23%. What gives?"
Fund complexes know what gives. The bubble burst. The market imploded. But complexes, unlike panicking investors, know the market will be back. So tell investors that. And don't go with the old "Stay the course" routine. How tired is that? While the message may be true, and may be one of the only ways to get investors to keep the faith, there are better ways to say it.
Some firms have taken a whack at this. But they miss the mark. Take Fidelity Investments' recent ad: "You are not the kind of investor who blindly reacts to each and every new market condition. You're informed. You're involved. You're focused."
The ad might as well have started with the tagline: "You are getting very sleepy."
In response, the investor is probably thinking, "What I am is really irritated, because I bought Fidelity's Advisor Aggressive Fund, and it's posting year-to-date returns of minus 25.26%."
Fidelity isn't going to hypnotize investors into investing with them.
While I'm no fund advertising copywriter, here's what I'd suggest. Run a one-page magazine ad with an all-black background. In large, white text, say this: "Scared? We aren't."
Then, in slightly smaller text, say this: "Markets rebound. In fact, there hasn't been a seven-year period when the market hasn't grown. It takes time to build Wealth. We'll show you how."
Simple. Blunt. Candid. Too few marketers are telling it like it is. Investors are freaking out. Fund companies are only going to calm them down by speaking their language.