Hedge funds need to get their brand house in order

by Sharp | June 11, 2014

Our Creative Director, Bob Ireland, recently weighed in on the importance of brand strategy in Hedge Fund Intelligence’s Absolute Return. Here’s what he had to say:

The recent change in the restrictions on advertising and general solicitation of private funds has sparked considerable debate about whether hedge funds will start actively advertising their fund offerings. We’ve seen some firms, most notably Balyasny Asset Management, dip their toes in the water in different ways. But most hedge funds haven’t taken advantage of the looser restrictions and the debate about whether hedge funds should advertise continues.

The problem is that the focus on advertising as a means of general solicitation is the wrong conversation that puts the cart way before the horse. Focusing on tactics before considering any real comprehensive brand strategy typically has negative results.

While it’s talked about early and often, advertising is just one medium of choice for funds and in general really only serves as an awareness vehicle. What’s missing is the need to step back before even considering advertising and determine whether a firm’s brand image is in order.

Most hedge funds today are a collection of investment professionals running a strategy to try to generate positive returns for their investors. Very few actually have a unique brand image that distinguishes them from the crowded and increasingly competitive environment. Firms need to do a better job of communicating their unique selling points – tangible and intangible, emotional and functional – and how these influence and create value for their key audiences. Having solid performance is not the only factor that investors look at when choosing a fund manager.

So let’s put the advertising discussion on the back burner for now and determine the health of your brand by asking some tough questions:

  • How are you different from your competitors?
  • What is your key benefit/value proposition?
  • What are the firm’s core values?
  • How do you want to be perceived by your core constituencies?

These questions may not be easy to answer, but they are imperative. Some legwork may be needed. You can start by conducting qualitative and quantitative research with such key constituents as accredited investors, management and employees of your firm. You will also need to develop a brand positioning statement that differentiates you, consider a refresh/update of your corporate identity, and draft a marketing/communications plan.
Once you have your “Brand House” in order you can begin to think about the most efficient means of communicating your value to your key constituents (including potential employees as well as investors). One means could be advertising if you’re looking to build awareness, but consider also a revamped website, which gives you the opportunity to tell your firm’s story in an optimized manner. A finely tuned web presence can not only strengthen and reinforce your brand equity, but serve as a destination and home for rich content. This content can include videos, white papers and opinion leader editorial (i.e., digital collateral), all of which can be searched, consumed and shared through social channels, thereby raising the firm’s profile.

Public relations can also be a very effective tool for communicating your brand message and raising awareness of the firm’s unique attributes. Having a comprehensive communications plan and a message platform that clearly and concisely conveys your core values can help you stand out from the crowd and raise your overall credibility with the investment community. Some firms have already done this, using video, social media and other avenues in a transparent manner to evoke an image of implied superiority.

This doesn’t mean you shouldn’t advertise to build your profile and own a position in the marketplace among investors and thought leaders. You just need to be dead on message (i.e., very strategic), clever (i.e., very creative) and efficient (i.e., very targeted in media) when doing so.

As the hedge fund industry matures and more firms become larger asset management organizations offering their strategies to retail investors, it will become increasingly important for such firms to have clear brand identities. Hedge funds are no longer just small groups of traders and portfolio managers; they are professional organizations with distinct cultures and values. The public needs to know that.

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