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Strategic Relationships and Branding Your Firm

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As managers focus on growing the size and scope of their practice, it is often the fundamental elements of marketing and distribution that present themselves as key barriers to success, says an industry specialist.

Just like any other small business owner, managers face the critical challenges of developing their brand, explains Alma Piscitello, the senior vice president of strategic relationships at Northern Lights Distributors.

“Tackling this challenge means managers need to take a close look at their individual value propositions, what makes their investment strategy unique, or whether they have a specialty or a core philosophy that drives their investment acumen,” Piscitello said last week in an interview with Money Management Executive.

Piscitello has worked closely with the investment advisor community to help firms develop unique marketing and distribution plans, and says she has discovered that many managers often overlook what should be most apparent.

“Understanding how (clients) select their investment solutions and what’s important to them is critically important,” Piscitello says.
What are some of the major distribution challenges managers are facing in the year ahead?

The big challenges that I see are the buyers’, or the investment advisors who are selecting the strategies, the selection process has changed. Because of a surge in technology, a lot of the information is easily accessible.

The conversation has changed. From a sales perspective, that conversation is no longer about, “Let me tell you about my strategy,” but it is more about, “Let me have a conversation with you about the value we can provide to your practice.” So, the conversation has changed systemically from that perspective.

What are some useful sales techniques managers should consider? 

From a sales support perspective, how do you tackle this challenge? Tackling this challenge means managers need to take a close look at their individual value propositions, what makes their investment strategy unique, or do they have a specialty or a core philosophy that drives their investment acumen. Identifying that is critical in order to create their unique value proposition.

Developing the unique value proposition is about highlighting expertise. For example, say they have a specialty in looking at behavioral finance as a key indicator of how they are positioning their portfolio.

Quite frankly, that’s an education piece. It highlights their competitive edge, and so creating that value proposition is not necessarily highlighting the investment process, but highlighting something unique in their philosophy that helps them stand out. So, highlighting their unique value proposition, that as a contributor to who they are is important.

The other aspect that I would consider from a value proposition standpoint is also to highlight something in their individual practice. Why do I say that? Most investment advisors’ clients – that they’re seeking to place or offer their product solutions — are also business owners. They relate to other business owners.

For example, we have a client that’s also a sister company that does an entire presentation on business continuity planning.

Now you’re thinking, how is this relevant? Well it puts you on the side of a potential prospect. You need to understand how they run their business or they’re concerned if their practices grow and mature and transition.

So, creating a value proposition that’s outside of the investment manager or the investment solution is critically important. Highlighting expertise and also finding something from a practice management standpoint places you on the same side as the buyer.

What kind of challenges do you expect managers will face when developing a plan for distribution?

It always starts with target market conversation and not right-sizing your audience.

When you right-size your audience, then you are able to understand the type of conversation you are having. If you’re going after a very high-end RIA that has an institutional manager selection process, they’re not really seeking for you to help them with their practice management, but they are looking at you as an institutional or successional buyer.

Your target market is important because your audience and the value proposition that they have and are seeking is very unique to them.

It always starts with a target market assessment; who is your audience, how do they engage the actual expectations that they have from you? So, are they professional buyers — which mean they’re looking at manager search selection and performance? There’s an expectation from a marketing and service standpoint.

The same thing goes for the other side of the spectrum. If you’re going to pure retail buy, which tends to be more transactional, there’s more of an educational element there — why does this strategy fit in the overall portfolio? How can you speak to your clients more effectively about application?

There’s a different conversation, so you can customize your conversation based on your audience. Target market assessment, understanding how they select their investment solutions and what’s important to them is critically important.

Engagement is important for you to formulate your action plan, your script and your ability to actually have quality conversations.

How does branding provide managers a competitive edge? 

Branding is such a specific item. So, branding can be attacked in a couple different ways. It can be your virtual brand in this world of high technology. That means having a website, having the ability to be searched and providing articles that might be picked up from a publication perspective.

All of these, in this very Google-focused world where everyone can find information at their fingertips, I think matters just as much as your ability to sit in front of someone.

As a matter of fact, most have already done their research before clients walk in the door, or have a conversation. That’s more with the younger generation, or the millennials, but now we all — mid-40s, -50s and -60s — we’re all doing our Google searches so it’s good to have a strong digital footprint.

From a personalization standpoint, I go back to the beginning. If our challenges with distribution are really about understanding the conversation and the value proposition, from a branding standpoint, everyone in your organization needs to understand your mission, core value and the value that you’re going to drive to your clients. That in itself provides a brand that is unique to the investment manager.

So, say one of your clients decided early on to become an educator on alternatives, which is their brand. People will go to them just for their intellectual capital alone, so it’s really about determining what your stake is.

I always say you cannot boil the ocean, but you can actually pick an island, put a stake in it and create a value proposition and stick to it. Then that recognition is going to be valuable as people are speaking to you or recognize what you’re bringing to the table on a day-to-day basis.

What types of messaging techniques do you suggest as an effective method for branding?

The digital footprint is important and messaging is important. This is still a people business and every time that you are speaking with someone, understanding how to go back to what your 30-second (or 60-second) pitch is — so what do you do, it’s not your title, but how you drive value for your clients and that you’re consistently speaking about that. You want to insight people to say, “How do you do that?”

Messaging and consistency across your organization is consistently important. You would be surprised — I have met individuals where the investment manager and the project manager would say something different than the analyst, and that’s not good.

Consistent messaging and goals throughout the organization for everyone to be able to speak adequately, and on the same page, is important.

The other is your actual physical branding. That has to do with everything from your business card to your presentation, and those sound antiquated, but if your organization has an interesting name and it can’t tell you the story why, people will use the connectivity.

So, I even think that at the creation of what your brand should be, something as simple as your symbol — what does that name stand for, tell me the story behind it, why is it meaningful to you — brings that human element out from people.

Can you discuss the emergence of professional buyers and what effects they have on the industry?

Everybody is a professional buyer at this point. The fact is that over the last 10-plus years, the world has moved from a transactional mindset to an advisory mindset and that came in amid a surge of very difficult times in the market in where folks really needed to have more of an advisory capacity for your clients. The solutions became more fee-based in nature; so therefore the financial advisors became professional buyers.

It was not just purchase this, and let me get in and out of that particular stock or bond, but it became let’s have a conversation on your portfolio or your long-term growth opportunities. So, it became very advice-driven.

When you are giving advice, you have a fiduciary responsibility. Most often, whether you’re discretionary or non-discretionary, you still have a responsibility to your client when you’re providing them with advice.

They have moved from transaction to due diligence-minded individuals and that is a professional buyer’s behavior. They are looking at the requirements, track records, good performers in their peer groups, they’re looking at AUM, the longevity of the actual firm and its strategies and they now — the advisor — are now professional buyers on behalf of their clients are looking into a wider range of strategies.

So that has changed the engagement of investment managers with their audience. It is a qualitative conversation. It becomes a deeper conversation other than just you should purchase this because it will do a good job for you in this environment. We have to prove a value that we are going to be able to drive to our clients. From a sales perspective we have to engage with our buyers.

They are more apt to look deeper into philosophy process and results because they have a responsibility to do so.

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