Companies bid to keep clients invested

Mutual fund companies have targeted advisers for increased marketing efforts as they seek to build business in a weak market .

Some of the companies focusing on advisers are bolstering efforts to help brokers and advisers encourage clients to stay invested – and in their funds. Some are giving them and their clients greater access to fund managers; others are offering as much market perspective and advice as possible.

But they all have one thing in common: They are keeping marketing budgets intact because they view now as a prime time to sell their story.

“It’s rare that [fund companies] get an opportunity where intermediaries are saying, `Hey, we need your help,”‘ says Burton Greenwald, a Philadelphia-based mutual fund consultant and analyst. “You don’t want to be one of those firms that seems to disappear when times are more challenging.”

And experts are cautioning fund companies cutting their efforts because of reduced marketing budgets.

“Most organizations have reduced expenses in the marketing area. But they absolutely should be careful because there are other firms that aren’t cutting back,” says David Holmes, a senior consultant with Mercer Manager Advisory Services in Louisville, Ky.

“The longer spending is postponed, the better chance competitors will gain the upper hand,” says Mr. Holmes, whose company serves the investment management industry.

Ideal time

The Calvert Group, which specializes in socially conscious investing, recently launched a new marketing effort that focuses more on advisers and less on individual investors.

“We did not cut back on our marketing plans or spending, because we felt it was an ideal time to highlight Calvert,” says Barbara J. Krumsiek, president and CEO of the Bethesda, Md., company, which has $6.7 billion in assets under management, up from $6.5 billion a year ago.

“It is times like this when thinking about the long-term, diversification and asset allocation goals … is so critical,” she says. “It’s important to us to be there in all markets and all situations with our support for financial advisers.”

Adds Reggie Stanley, senior vice president of marketing for Calvert, “[The new marketing push] is being done largely to emphasize helping advisers build their business and differentiate themselves in what is essentially a volatile and increasingly competitive market.”

Likewise, staff at Citigroup Asset Management in New York has spent more time reaching out to advisers and making fund managers available to them and their clients.

“When we see people needing a higher level of service, it’s a golden opportunity to grow market share,” says Edward Giltenan, spokesman for the Citigroup Inc. unit, which has $393 billion in assets under management, up from $388 billion a year ago. Of the $393 billion, $231.2 billion is for individuals, down from $236.2 billion a year ago.

“People are now more interested in what we have to sell, which is broadly diversified, prudent, long-term investing,” says Mr. Giltenan, whose group includes the Smith Barney and Salomon Brothers fund families along with personalized portfolios such as separate accounts.

Cross-country tour

In the first quarter alone, the unit’s sales force visited with more than 14,000 financial consultants and their clients across the country.

Conference calls among advisers, clients and fund managers were also held much more frequently than has been typical for the company.

At Aim Management Group Inc. in Houston, company executives decided in February to include portfolio managers in their cross-country tour to meet with advisers.

“We want to make sure … the brokerage community knows we’re going to be there during good times and also times like this,” says Jim Salners, an executive vice president and director of strategic planning for Aim, which has $100 billion under management for individuals, down from $134 billion a year ago.

Mr. Salners says the current, monthlong road show is mostly about providing market perspective and giving advice on how to deal with fearful clients, more than about selling its funds. “But the self-serving mode is that we want to stop as much attrition [from our funds] as we can,” he adds.

Also at Aim, although there have been no layoffs, department heads have been encouraged to fill open positions without going outside the company – except in the marketing department.

The director there was specifically told to make sure all positions are filled, even if it means going outside the company.

Mr. Greenwald sees the value in such a move. “It’s one thing to cut expenses in support staff, but another to cut senior marketing staff and wholesalers,” he says. “They are the people who are the point of contact for [brokers and advisers].”

Although Aim’s assets are down from $176 billion a year ago, the company attracted $6.7 billion in first-quarter assets to rank seventh among U.S. fund companies.

“There’s a great deal of credibility that can be earned at a time like this in having a long-term stake in the success of intermediaries’ efforts,” Mr. Greenwald says.