William E. Grau became head of marketing for Deutsche Asset Management's retail and mutual fund groups early last month. Grau formerly was marketing director for the retail fund and private and institutional banking businesses of Chase Manhattan Bank of New York. Grau recently discussed Deutsche Asset Management's efforts to establish its brand name in the U.S. mutual fund market with Mutual Fund Market News reporter Andrew Greene. An edited account of their conversation follows.
MFMN: Tell us a little bit about your experience with Chase Manhattan Bank.
Grau: I worked for Chase Manhattan for eight years and I was a marketing director for three of its asset management businesses. The first was their retail mutual funds business, the second their private banking business that included an emphasis on asset management and the third was their institutional business. I think that background includes a lot of what Deutsche is trying to do in terms of selling mutual funds through various intermediaries and institutions, and my background will serve me very well. At Chase we sold our funds through brokers, registered representatives, financial advisors and trust banks. Those are very important marketing channels for us at Deutsche and play very well to the strengths that it has in terms of institutional style and method of investing.
MFMN: How do you plan to use what you learned at Chase to help you at Deutsche?
Grau: I think there's the understanding that different distributors need different materials. I think that will be very helpful to me in the funds business with the direct retail investor all the way up to the huge institutional investor or the high-net-worth investor through private banking.
MFMN: What distribution channel will you be marketing to?
Grau: We really sell our funds primarily through financial intermediaries and institutions.
MFMN: How are you trying to develop distribution through intermediaries and who are you working through?
Grau: Our distributors are primarily financial advisors, defined contribution plans and trust banks. Part of our marketing strategy is developing brand awareness with advertising campaigns but we're also going to improve our communications efforts to distributors, including getting out new information about the family of funds and the name changes and performance information on some of the funds.
We are also having a road show and we're teaming up with our institutional colleagues. We'll be going around the country for two weeks in May [May 9-19] starting in New York and we'll be going to Philly, Chicago, Dallas, San Francisco, Boston and Atlanta. We'll be talking about our consolidated capabilities. We've invited marketing representatives, financial advisers and intermediaries to participate as well as a lot of our institutional clients and prospects.
MFMN: Are you interested in offering your products to wirehouses or any other intermediary channels?
Grau: Absolutely. Some of our funds are available through Schwab and Fidelity's supermarkets.
MFMN: I know Deutsche Asset Management offered a lot of money market funds but has added funds through acquisitions. What kind of funds does Deutsche currently offer?
Grau: We have a full range of funds. In terms of investment style, we have actively managed funds, quantitative and index funds. That is definitely an extension of what we had at Chase. At Chase it was really active. We do sell money market funds but I think the other three are very important to us and the range of funds spans the spectrum of risk-return. We have equity, domestic and international equity, domestic and global fixed-income, specialty index funds and quant type funds.
MFMN: What are some areas of possible product development and with what areas in your product line do you feel satisfied?
Grau: One of the great things about the consolidation was that the two companies that came together, Bankers Trust and Morgan Grenfell, had product ranges that fit very well together. In particular, Banker's Trust mutual funds were very well known for active international equity as well as the index and the quant strategies. The Morgan Grenfell funds were much better known for the fixed-income and the active U.S. equity and active international equity. So, when you put those together, that does give us a really broad range.
MFMN: How do you plan to increase assets in your funds?
Grau: In the long term I think it requires a well developed, integrated marketing strategy. The biggest component right now, which you might have seen, is an advertising campaign in Barron's, The Wall Street Journal and a whole host of business and financial publications. We started a new advertising campaign last month and the first ad in the campaign talks about the name change and the fact that Banker's Trust and Morgan Grenfell have been combined under the name of Deutsche Asset Management. That campaign will continue throughout at least the rest of the year. We will be adding different advertisements to promote aspects of our capabilities. So, for example, the next ad is going to talk about our international investing capabilities. We've got some really great international funds. We have a European equity fund that is getting a lot of play so we're going to emphasize the international capabilities. And then we're going to follow up those ads with new ones that talk about our domestic equity capabilities and our domestic fixed income and some other things that are still being finalized.
MFMN: What is the goal of your advertising campaign?
GRAU: It's to let the world know that we have consolidated the families, that they will all be managed under the Deutsche name and that's a great deal of the work that has been going on since the merger came through last summer. [We have been] consolidating the fund families and renaming them. Some of them were called Banker's Trust, some of them were called Morgan Grenfell. There were some Deutsche Bank mutual funds as well. Pretty much the whole name change process has been completed. After April 30, only four more of our funds will need to be rebranded under the Deutsche name.
MFMN: How much time will you spend establishing the Deutsche brand name before you focus on other aspects of your product?
Grau: This campaign is slated to go until the end of the year. And we expect there will be five or six separate advertisements that will make up the campaign.
MFMN: Is the Deutsche Bank name strong enough in the U.S. to leverage the development of the Deutsche Asset Management brand?
Grau: We certainly believe it is. When we made the decision about the name, they felt it was important to go with one name that hopefully represents strength and stability across all of the markets. And Deutsche Bank is the world's largest bank right now and has a very large asset management business. We're one of the largest asset managers in the world. We have almost $600 billion in assets.
MFMN: Do you have anything in the pipeline as far as new funds are concerned?
Grau: Not currently. It is something under review and we might have something maybe in a couple of months.
MFMN: Any idea where those discussions are leading?
Grau: No. As I said, we have a fairly complete range of funds and I think our emphasis right now is going to be to publicize the ones that we have. There are a number of really fine ones that I think we can do a lot with but we will be looking for other opportunities.
MFMN: How does the Flag Family of Funds fit into your overall marketing strategy?
Grau: Flag Funds is an independent family of funds that has built up some name recognition in the broker market and the decision was made to stick to that name and create a separate campaign to represent those funds to reps.
Grau: I think they felt there were some very specialized, niche products that are available through Flag and that they did have name recognition in their appropriate distribution channels so they wanted to continue to build on that.
MFMN: Does Deutsche's immense size present any challenges in branding and marketing your funds?
Grau: The two companies that I've worked for have been huge companies - Chase Manhattan and Prudential - and to me that size has always been a wonderful opportunity. We have resources, we have support, we have expertise that a lot of other companies simply don't have. So, size has certainly always been beneficial for a lot of the things that we do and the fact that Deutsche is such a well-respected name around the world. It may not be as well known in the United States but it certainly will be.
MFMN: What is Deutsche doing to extend its funds' holding periods?
Grau: Well, again I think the difference here is that because we deal through the intermediaries, we appreciate the value of an advisor to an individual who is planning for the longer term. So, what we're going to be doing is providing more educational and research type materials to these advisors and holding periods can certainly be one of the issues [included in the materials]. That is something that we need to resolve.
MFMN: How does the Internet factor into your marketing approach?
Grau: That is certainly another big piece of what we are going to be emphasizing over the next two months. We are planning to significantly uptick the content and capabilities of our website. It's anticipated that by sometime in the middle of the year, we will have done a redesign of our website so that information will either be categorized by distributor or segments. Right now, if you go into our website, you have a choice of basically retail or institutional information. But what we're going to do is drive down those two larger groups so that somebody can go in and click on information that is specifically designed for financial advisors. Or, by clicking on another button you can get the fund contribution plan information, another button could be of interest to trust banks. So we are planning to reformat our website and divide up the information so it will be more valuable to the individual who uses it.
MFMN: What will your website offer for the individual investor?
Grau: There will be a section for someone that just wants to come in and learn more about our organization and the funds. They will be able to request prospectuses and applications, but that's not the focus of the site.
MFMN: Has the recent market volatility affected your business? What kind of questions are your intermediaries asking?
Grau: It really hasn't affected our business. We simply provide more information to the advisors and intermediaries about how we run our funds and the strategies that they use and they can share that with their clients. Education is going to become an important thing for us. We are setting up more conference calls that are available to the intermediaries to give them the opportunity to hear directly from portfolio managers and an investment team so that they can better understand the funds. And again, it is the intermediary who has the direct relationship with the clients, so we just want to feed them [the information]. We are also going to be doing a series of white papers on generic themes that highlight certain trends like index, active quants and different asset classes. We have to recognize that a lot of the work that's been done in this business since the merger has been to organize the product offerings and make the required name changes. So, it's really now that all of the kinds of opportunities are ahead of us in terms of creating and developing those materials.
MFMN: What are your long-term goals for Deutsche?
Grau: I see brand awareness rising substantially and a better understanding of our various capabilities. From an investment strategies point of view, a greater appreciation by intermediaries that we can provide a full range of asset classes and different strategies. I think it's very important for us to make people very aware of our total capability.