Author: Mike McLaughlin

Marketing Words: Should “Passion” be Part of Your Message?

Posted by Mike McLaughlin on Jun 05, 2015, in Thoughts

Listening to a baseball podcast the other day, the two hosts digressed into a conversation about passion. One talked about the awkwardness of communicating that he is NOT passionate about what he does for a living (i.e., write and talk about the statistical nuances of baseball) given how many people love the sport. I found myself thinking that the hosts really do love the sport of baseball but have a hang-up about describing that love as a passion.

This presents an interesting issue for marketing, namely: is passion a strong term to incorporate into firm-level positioning and marketing messages? I’d argue it is not.

Most individual people aren’t passionate about what they do. But as Anu commented to me, people who excel in their work frequently have passion for it. In other words, there’s a good correlation between great performance and passion. Therefore, it’s easy to understand why a single person would describe themselves as passionate about something. It’s a characterization that conveys a deep and personal connection.

But the highly-personal nature of passion is why it falls down as a way to describe a larger organization or firm such as an asset manager. People understand that most individuals lack passion for their jobs; 70% of people are disengaged in their careers according to a Gallup survey. As a result passion at an organizational level carries a strong risk of failing the smell test; it attempts to represent something that isn’t very believable.

There is a lot of nuance in an issue like this. And while I’m not a fan of passion as a marketing term, there are certainly firms who will disagree. That’s what makes the discussion interesting.

Marketing Effectiveness Rating for Passion: 3 out of 10*

* note: scale is arbitrary, especially since this is the first post on marketing word choices

It’s A Lot About the People

Posted by Mike McLaughlin on Jan 23, 2015, in Thoughts , tagged with , ,

A few weeks back, Ignites ran a poll (subscription) on the desirability of marketing star portfolio managers to retail investors. 60% of respondents indicated that focusing on the star PM is an unfavorable strategy.

It’s an interesting question, and despite the fact that there is no absolute answer you can count me in the minority. I’m not advocating promotion of a singular star necessarily, but more aggressive marketing of the investment team in general. It’s a weird quirk that the presentation of a investment strategy so often places the people driving that strategy in the background. The investment philosophy and process of most active mutual funds, for example, is broad enough where two different PMs can make markedly different decisions, craft different portfolios, and deliver significantly different results. So isn’t the person driving that fund paramount?

There is already evidence of firms raising the profiles of investment staff. Oppenheimer and JPMorgan offer two examples. I’d argue that asset managers will (and should) continue to build more depth around people in marketing their products. Going further, I think a greater focus on people will emerge in the passive space; after all, passive strategies are still ultimately designed by human beings.

Sure, there are always risks associated to marketing individuals. They change jobs. They retire. Some have personal shortcomings. Some are less than photogenic. But the reality is that the individuals are largely what firms need prospective investors to buy, and so they need to be a big part of any product’s story.

Quick Thought: International Brands in the US

Posted by Mike McLaughlin on Jan 05, 2015, in Thoughts , tagged with , , ,

Ignites ran an article last week (subscription required) about the emerging efforts of foreign banks – specifically BMO, HSBC, and RBC – to grow their asset management presences in the United States.

I have no doubt these firms can build successful, profitable US businesses. But I do ultimately question the overall brand strategy.

Time and time again, large overseas firms attempt to lever their global brands within the US. I think this is a problematic approach, in part because “large global brand” is mismatched with the typical business strategy. As Damion Hendrickson, senior VP of intermediary sales for HSBC, put it in the article:

In order to be successful, you really have to specialize in something when you’re starting out. You have to have some sort of niche to your brand.

 If this is the aim, firms like HSBC face two significant challenges:

  • Meshing Global with Niche: reconciling an image as a global financial power with a nimble specialty asset manager is an oil-and-water strategy.
  • Provincialism: at the risk of oversimplifying, US financial advisors are more provincial than most think. “Global” certainly matters in terms of the strategies and investment expertise a firm offers, but being an international financial powerhouse (e.g., bank) is overrated by firms in terms of how much advisors really care.

Neither challenge is of course insurmountable. But as these and future overseas firms try to gain traction in the US market, I think that seriously reconsidering the standard “let’s leverage our global brand” approach is something very much worth doing.

The Flawed Praise of “No Marketing”

Posted by Mike McLaughlin on Jan 31, 2014, in Thoughts , tagged with , , , ,

A recent article (subscription required) from FundFire covers Capital Group’s recent efforts to amp up its public communications. The short version is the firm is doing more to explicitly boost its brand and market itself.

I contributed a few thoughts to the article but wanted to expand a bit on this quote: There’s a badge of honor associated with not marketing.

It’s not rampant, but too often firms that say they don’t market themselves are falsely praised for having that stance. I touched on this in a post last month about Dodge & Cox, where Morningstar connected the firm’s reluctance to market itself to overall trustworthiness. Less obviously, Barron’s touched on Dimensional Fund Advisors’ lack of advertising in telling the story of that firm’s success.

The idea that a lack of marketing is somehow virtuous bothers me. Marketing is an agnostic discipline. You can execute well and you can execute poorly, but how you view marketing does not fundamentally make an organization better or worse.

More importantly (and obviously), ALL successful managers market themselves. They have Web sites. They have people who meet with prospects and tell them about the organization and what they offer. In some cases they even spend time with prominent publications so that those publications can write fawning articles. (Yes, I’m veering into sarcasm.)

I think it’s great that Capital Group has decided to be more proactive with the branding and marketing efforts. But the idea that they didn’t market themselves (or that any unwillingness to do so) was a part of why they did so well for so long is an utterly false narrative. I hope it’s a narrative that disappears across the industry.

A Misguided Assessment of “Culture”

Posted by Mike McLaughlin on Dec 06, 2013, in Thoughts , tagged with , ,

I just touched on something from Morningstar a few weeks ago, but I’ve got to go back to the well one more time.

Earlier this week the article Dodge & Cox is a Model Fund Family caught my eye, and it’s been on my mind ever since. The article’s intent is to analyze Dodge & Cox’s corporate culture as a key element in Morningstar’s stewardship evaluation for the firm. To be transparent on where I’m coming from, three initial thoughts:

  1. I conceptually understand and see merit in Morningstar’s goal to evaluate stewardship.
  2. However, I struggle with any assessment and judgment on culture. Culture is a byproduct of the people, dynamics, business situation, etc. of a company. It’s not an input.
  3. When was the last time you read a story about how awesome the culture is at a company that is performing terribly financially and/or letting people go?

In most cases, assessing culture is simply a qualitative and subjective exercise that ultimately supports preconceived notions of an organization. Dodge & Cox is a private company that has been hugely successful for 80+ years. Anyone would be hard-pressed to objectively and convincingly conclude that the culture there is one that doesn’t work.

To that end, the Morningstar article feels like a hollow exercise, and in fact one that is a bit condescending to other asset managers. The one thought that really stands out to me is this:

There are other reasons to trust the firm. It shuns marketing and advertising, has no salespeople, and has rolled out just five funds in eight decades.

Equating an aversion to sales, marketing, and product development with great culture and stewardship implies that embracing those things negatively impacts a firm. Ridiculous.

Morningstar thoughtfully updates its methodology on a regular basis. The cultural component of its assessment of funds and firms is one that I think needs to be reconsidered.