First digital steps to direct fund investors

first digital steps to direct fund investorsBoutique investment managers can take their first digital steps to connect with direct retail fund investors at surprisingly low cost using simple tools.

“Faith is taking the first step even when you don’t see the whole staircase.”   – Martin Luther King, Jr.

The investment management value chain faces disruption for which many investment managers are poorly positioned.

The retail funds market offers attractive growth, but asset managers have struggled to access this market directly.

However a direct funds strategy based upon engaging a targeted audience over a period of time presents boutique managers with an opportunity to grow funds whilst containing their initial marketing spend.


What’s wrong with the way investment managers have always made money?

Institutional investment management is an industry suffering from chronic over-capacity, especially in developed markets such as Australia. This is driven by a number of macro challenges:

  • Low brand awareness of investment managers at the end-consumer level due to the dominant role of investment planners and other gatekeepers,
  • The absence of fund differentiation in a market crowded with seemingly identical product characteristics
  • An increasing consumer preference for low-cost beta funds asserts downward pressure on management fees
  • Insourcing of investment management by larger superannuation funds impacts the universe of funds that seek active investment
  • Increasing compliance costs and fund transparency demands lead to rising manager costs

first digital steps five macro trends

Figure 1: Five macro Challenges facing boutique investment managers

Thus pricing power shifts along the value chain from institutional investment managers to superfunds that focus on creating value through superior asset allocation and by delivering beta at low cost.

Investment managers lacking a clear point of differentiation are thus left with a highly commoditised product facing severe margin compression.

The retail investment market presents comparable challenges. Planners aligned to the six large wealth management groups in Australia control client relationships and demonstrate a bias towards proprietary funds.


Should we go digital?

Therefore investment managers are looking at how they might pivot their business strategy to connect with direct investors in order to capture more of the value chain.

New thinking is thus required to succeed in a distinct market in which performance is a hygiene factor, albeit an important one, that on its own will not deliver sustained and profitable fund flows.

Investment managers must identify a strategy that builds brand awareness, differentiates their market value proposition from a mass of similar product providers and develops a trusting relationship with end investors.

Fund managers that implement a digital strategy have the opportunity to engage with direct investors who in time come to know, like and trust them. This requires an on-going commitment to share insight in order to address investors’ unique pain points.

A digital strategy is much more than promotional brochures and fact sheets posted on the company website, with highlights re-produced on a Facebook page.

Corporate websites that fail to deliver value – as perceived by the consumer – through sharing valuable, relevant and continuously updated content, along with the offer to engage meaningfully, are seldom re-visited.

Businesses across many industries have developed valuable market propositions by establishing themselves as the leading informational provider amongst their chosen niche audience.

But is it possible for boutique investment managers with limited cash flow to adopt such an approach, by taking a series of first digital steps that can begin to engage a targeted audience at a reasonable cost?


Start with the strategy

The reason that most investment managers are unsuccessful when implementing a direct retail funds business strategy is that they focus their first digital steps on promoting their products.

This may seem counter-intuitive, as after all, the growth of the company depends upon increasing revenue derived from managing investment funds.

However a digital strategy based upon brand building, promotional campaigns and the digitisation of product collateral, is most likely doomed from the start.

Instead an investment manager should set to one side its products and even its brand.

It should identify an audience with pain points and interests that intersect with the managers’ area of unique expertise. In the case of a small boutique manager, this sweet spot might well be a narrow subject area of concern to a smallish niche.

It then develops a deep insight of this group’s characteristics, its attitudes and its online behaviour. This enables the investment manager to identify a buying persona(s) of its target audience.

The manager should then focus exclusively on building this audience by sharing insight in order to establish credibility as the leading informational provider in its chosen niche.


Customer experience excellence beats digital wizardry

Asset managers must develop a digital tone of voice in their first digital steps that reflects their brand values and aligns with their target audience.

Managers implementing a digital strategy must move away from the campaign mind-set. Instead they must look to develop long-term relationships through continuously sharing insight in their unique field of expertise.

This requires the content creation to focus laser-like on issues that concern the audience, not what interests the manager.

The objective should be to build an audience through a valued customer experience. It should not focus on digital wizardry for its own sake – much less the promotion of products.

Under a direct funds strategy, the business must recognise that content is a key component of the product, not simply a method of promoting it. This requires a significant shift in mind-set, with which many managers struggle.


Tools for the first digital steps

An investment manager taking its first digital steps may well look to start in a small way without committing significant costs to the initiative initially.

Under such a scenario it is likely that it will start by implementing a blog-based approach. This allows the sharing of insight that builds brand awareness whilst also demonstrating authority in the manager’s area of expertise.

first digital steps blogBlog posts may be written by a dedicated internal resource, shared between a team of subject experts or out-sourced. The frequency is likely to depend on the extent of available resources, but should be regular, e.g. daily, weekly, monthly etc. It should also be released at the same time, e.g. every Tuesday at 10am.

Search Engine Optimisation (SEO) is often perceived as a dark art but the restrained use of key words in titles, URLs, sub-headings, meta description and images can increase page views. However search engine ranking depends primarily on how readers interact with articles, (as measured by click-through rates, time on page, bounce rates, etc.) Therefore blog posts should always be written for the reader rather than the algorithm.

Video can also be an effective tool to build brand awareness and engagement in the early stages. Most investment videos are ineffective because they fail to drive an emotional connection to the brand, focussing instead on promoting short-term sales. However those that address an investor pain point can effectively position the manager in the minds of the target investor at very low cost.

In time the manager can progress to using media such as podcasts, webinars, tent-pole video programming etc. in order to develop its audience, as resources allow.

A written strategy increases effectiveness. According to the Content Marketing Institute1, only 37% of B2C content marketers, but 58% of the most effective, have a written content strategy in place.


Spreading the word

However the finest piece of business content will still fail to deliver a transformation unless it is effectively distributed.

Most investment management businesses embarking on their first digital steps will have a mailing list. The aim should be to grow this by encouraging casual site visitors to subscribe to e-mail alerts that are sent when new content is published; this can develop into a regular newsletter.

Lead magnets are items of free content such as an infographic, e-book, white paper or webinar that offer investment insight beyond that available in the blog post. These are made available in exchange for the reader sharing some data, initially simply an e-mail address. Thus the subscriber list grows and the first step towards developing a relationship with the investment manager is taken.


It’s a social world

first digital steps social mediaIt is possible to build a direct business organically but it will be accelerated by the effective use of social media.

Social is often portrayed as a strategy in itself, but it is better considered as a tool that can support wider business goals.

Social media is especially effective for the boutique investment manager that lacks brand visibility and a large e-mail list of qualified prospects.

Through promoting posts the manager can rapidly increase the number of website hits and e-mail subscribers at low cost. All the major networks offer the ability to promote to targeted audiences using a range of demographic criteria.

Linked In facilitates a vast number of often very specialised niche interest groups. Engaging in such groups (whilst avoiding blatant self-promotion) offers the opportunity to demonstrate authority, that can lead to increased website traffic.

The value of social media is in attracting online traffic away from other sites and onto the investment manager’s own domain.

Shares and likes can support first digital steps but they should not be seen as a business objective in themselves. The focus should be on creating high quality content that interests a precisely targeted audience.


Lead Nurturing

There are a number of highly sophisticated marketing automation platforms such as Marketo and Hubspot that offer comprehensive lead nurturing solutions.

However e-mail services such as MailChimp or AWeber can progress the early stages of a relationship at very low cost.

This allows the manager to:

  • Share curated content via a newsletter
  • Send questionnaires to identify areas of subscriber interest
  • Distribute high-impact historic content
  • Promote content that identifies prospects who are closer to investing

This process can develop from the first digital steps through to prospects becoming investing clients and in time developing into on-line advocates of the investment manager.



Investment management businesses, especially those with limited marketing resources, should not be deterred from investigating how a digital strategy might enable them to connect directly with retail fund investors.

Many such initiatives fail dismally because they adopt a marketing campaign mind-set that defines success in terms of short-term product sales – which then fail to materialise.

The self-directed investor is looking for a helping hand in identifying their own solution, not a sales pitch in digital form. They will engage with managers who are willing to share insight but are unlikely to invest funds until they have come to know, like and trust a manager over an extended period of time.

Digital tools empower the investment manager with modest resources to engage a precisely defined audience that self-selects.

Once established as a ‘candid friend’ that has built credibility as the leading informational provider in a chosen niche, investment into the manager’s funds is much more likely.


How do you think boutique investment managers can take their first digital steps to build relationships with self-directed investors at a reasonable cost?


We have created a concise twenty-step guide to how an investment manager can establish a profitable and sustainable direct retail funds business through an engaged customer strategy; please click here to download.


‘Mother and Baby Legs. First Steps’ image courtesy of nenetus at

‘Blog Sign Character Shows Blogging And Social Media’ image courtesy of Stuart Miles at

‘Social Media Marketing Meter’ image courtesy of Stuart Miles at


1 Content Marketing Institute, “B2C Content Marketing: 2016 Benchmarks, Budgets and Trends – North America”, 2015, Slide 8,


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