In the backdrop of increased competition and evolving technology, asset management companies are stepping up their shareholder communication efforts.

Robert Helm, a partner and leader of Dechert's financial services practice group, says the 10 fund companies he works with are all focused on improving communications with shareholders but there is no regulatory pressure driving the efforts. Helm says many asset managers are looking to shift their mandatory disclosures and other shareholder notices from mailed printed material to an online format. He says this helps save printing and mailing costs along with enhancing the chances that the notices will be read.

"Ideally everyone in the industry should be marching in the same direction which is improving shareholder communication," says Helm, who is a member of the Mutual Fund Directors Forum advisory committee. "Most shareholders receive letters in the mail and throw it right in the trash."


Creating an effective shareholder communications strategy is particularly important for smaller asset management companies, according to Neil Hennessy, CIO of Hennessy Funds, which has $5.5 billion in assets under management.

"Being a small company we have to think outside the box," says Hennessy, a portfolio manager who began his more than three-decade investment management career as a financial advisor. "We don't have the capital to do what the big boys do."

One way Hennessy tries to distinguish itself compared to other asset managers is personalized phone communication with shareholders. Hennessy says his firm is one of only a handful in the fund industry with no voicemail in place for shareholders. The only time a Hennessy shareholder will receive a pre-recorded message is if they call after business hours.

"When a shareholder calls I want the phone to be picked up in the first two rings," says Hennessy. "I don't want them to go through voicemail hell."

One regulation that has impacted asset manager shareholder communication is the SEC's "plain English" rules for prospectuses adopted in 1998. Hennessy says his firm has always made an effort to produce prospectuses in as an easy-to-read format as possible.

"We want people to be able to read it and understand it," says Hennessy. "We have always worked toward that."

Gemini Fund Services CEO Andrew Rogers says steering shareholder notices to an email format is nothing new but he expects it to increase in coming years as more millennials become investors. He says one method some asset managers will attempt to ramp up email signups is offering incentives such a Starbucks gift card.

"When you talk to the next generation they don't want hard copies," says Rogers, whose parent company is NorthStar Financial Services "They want it easily accessible."


A major obstacle fund companies have when trying to steer their shareholder communication more electronic is that many investors tend to be through third party intermediaries like broker-dealers networks. Rogers estimates that 95% of his clients are from broker-dealers.

"Mutual fund companies in general do not have direct access to the investors," says Rogers, who prior to arriving at Gemini oversaw around 60 funds at JPMorgan Chase. "We embrace electronic delivery but it has yet to be embraced much in the broker-dealer community."


Despite the increased popularity of social media sites in recent years like LinkedIn, Twitter and Facebook, Helm says asset managers are reluctant to embrace these platforms for shareholder communications. This stems both from uncertain regulatory restrictions regarding what can be posted on social media as well as not wanting to risk how information is portrayed in an open forum. He adds that when larger asset manager companies who have Facebook pages such as American Funds receive a shareholder-related question, they will direct that user to the company website or phone number.

"Companies typically do not want to communicate with shareholders via social media," says Helm. "They would love to be able to get eyeball time but they want to do it the right way."

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