How Social and Digital Media are Impacting Fund Distribution

    In any environment, fundraising is challenging. For emerging or spin-out managers with new investment vehicles, trying to connect with a new set of investors/allocators without a pre-existing relationship can be exasperating.

    Helping asset managers thrive in the age of digital fund distribution

    For the last 20 years, we have helped large and small asset managers alike solve marketing and distribution challenges. We have learned many lessons along the way. In this edition of OverSubscribed, we explore the use of digital and social media amongst institutional investors. 

    In any environment, fundraising is challenging. For emerging or spin-out managers with new investment vehicles, trying to connect with a new set of investors/allocators without a pre-existing relationship can be exasperating. Succeeding in the digital age requires an online presence, as well as the ability to identify and influence online prospects.

    Social media is joining traditional financial news media as a key source of information used by institutional investors in their investment processes. In fact, a study from Greenwich Associates reveals that almost 80% of institutional investors use social media as part of their regular workflow, and approximately 30% of these investors say information obtained through social media has directly influenced an investment recommendation or decision.

    “With approximately 40% of the institutions globally expecting to increase their use of social media in 2022, we’re projecting a further, rapid increase of social media influence in institutional investment markets.”

    Dan Connell, Head of Structure and Technology at Greenwich & Associates

    As investors continue to consume digital content, complimenting traditional distribution strategies with digital marketing has become increasingly important.

    Introduction - Brave New World: Welcome to the Digital Age

    Historically, success in fund distribution has been attained using dedicated sales teams, fund wholesalers, or third-party marketing teams providing unique research and information for those allocating fund dedicated capital. Because most were dependent on placement agents for manager access, strategy research, and investment diligence, they were captive to the sales intermediaries representing the funds.

    The role of digital media in fund marketing and distribution

    Today, regardless of industry, most consumer purchase journeys begin with a Google search. Advancements in data analytics, scalable personalization, omni-channel communications, and dynamic (intent-specific) content continue to change consumer behavior. Investor behavior and decision-making is following a similar path.

    Investors and allocators — once reliant on wholesalers and fund marketers for fund access, strategy research, and performance benchmarking, are are no longer captive to sales intermediaries. Freed from captivity, the digitally enabled are using technology to run manager searches, conduct diligence, and manage investments.

    To add to the complexities of building fund AuM, fund allocators growing use of online technology platforms and “business-focused” (b2b) social media platforms are forcing marketers to identify and connect with these prospects on non-traditional digital platforms. This is antiquating the sales, marketing, and communications blueprint used by the industry for the past fifty years.

    The Need to Innovate

    “The increasing pressure to innovate technology and client centricity will be intense. The shifting market and technology landscape, combined with increased competition will require asset managers to take action across all aspects of their business.”

    Accenture – Future of Asset Management

    What is Digital Distribution?

    Digital distribution is the process of using data-driven technology to identify and influence sources of fund dedicated capital. Those using digital technology are considered to be “digitally enabled.”

    Digital enablement allows firms to trade sales instincts, assumptive marketing, and traditional fund marketing for more reliable (and cost-effective) data-driven distribution models. The days of paying fund advisors and wholesalers hundreds of thousands per year for instinctual selling are behind us, as are the days of assumptive, non-quantifiable marketing.

    Data-driven strategies help solve the challenge of online investor identification and prospecting, representing a new formula for building fund AuM… which is especially timely to an industry trying to navigate the impact of continued fee pressures and margin compression.

    The advantages of the digitally enabled are noteworthy, especially in attracting and retaining increasingly tech savvy investors. The stakes are high and the future is clear — those who are able to meet and exceed the growing expectations of investors are increasing market share and retention rates. Those unwilling or unable to adapt will be forced to shift from revenue expansion to maintaining relevance. Welcome to Digital Darwinism…

    Who is using it?

    Today, many of the largest asset management complexes are shifting away from wholesaler-driven models to data-driven marketing, lead generation, and fund distribution strategies… aka-digital fund distribution. Most are building dedicated teams focused on the design and execution of digital lead generation and fund distribution strategies.

    However, most small to mid- sized enterprises (SMEs) lack the inclination or resources to invest and manage internal distribution strategies, let alone technology enabled distribution strategies. Following the lead of similar industries, service providers offering subscription-based technology services help small to mid-sized firms bridge the gap with affordable, yet sophisticated solutions.

    Meeting The Rising Expectations of Online Investors

    According to PwC’s recent Global Fintech Survey, only 53% of surveyed asset managers believed they were meeting the needs of tech savvy clients, while more than 80% of digitally enabled managers reported that they were meeting the growing expectations of digitally adept investors. This is important differentiation, especially as it relates to prospect engagement and investor retention.

    “We thought we knew our customers, but turns out, the FinTechs really, really know our customers.”

    Survey respondent, PwC, FinTech Global Report

    The Role of Social Media / Digital Media

    Digital media has evolved into an important tool for institutional investors, as it provides allocators the ability to search and sort research and information for relevance with great efficiency. With that said, institutional investors are trading informational for functional research, a move made possible by switching from traditional media to digital media. Digital media platforms allow allocators to aggregate, filter, and save investment related research and accompanying content. This is why keyword and search engine optimization (SEO) are becoming critical components of any fund distribution strategy.

    In fact, according to Greenwich and Associate’s 2018 survey, Investing in the Digital Age: Media’s Role in the Institutional Investor Engagement, 80% of institutional investors reported using social media and digital channels as part of their investment research and diligence efforts.  Interestingly, the results showed social media had not just grown but had closed the gap on traditional media as trusted sources of information among institutional investors. The same study showed institutional investors are consuming social media more regularly than finance-specific trade publications, with 63% consuming the former and less than half regularly utilizing the latter.

    Digital media has quickly become the most utilized media resource for the market updates among institutional investors, with LinkedIn recognized as the most prevalent provider of personalized market information. Google and Twitter were also named, but the anonymous nature of those platforms often restricts their ability to tailor news feeds.

    According to Greenwich and Associate’s survey, the use of investment related digital content in institutional channels is here to stay, as 86% of surveyed allocators indicated they read and acted on content delivered via social media, with 41% reporting they did so weekly.

    Building a digital distribution strategy

    With substantial evidence to support the benefits of data-driven marketing and communications, finding the best path to digital transformation can be a daunting task. We believe the answer lies in outsourced platforms capable of reducing the technology investment, eliminating staff increases, and removing the integration risk commonly associated with technology adoption.

    Tomorrow’s leaders will harness data and technology to personalize and deepen investor engagement. The investor experience will be built upon data-driven insights, allowing marketers and distribution teams to individualize prospect and investor engagement with personalized marketing and communications. Data serves as the foundation, helping firms to understand stage-specific intent across every aspect of the investor journey.

    Regardless of the chosen service models, asset managers should look for digital strategies that provide the following solutions:

    • Data Unification – Digital distribution begins by creating a centralized database of investor and prospect into a resource that is accessible by all stakeholders.

    • Prospecting Profiles – Profiles of previous and existing clients can provide granular insights as to who a firm’s best customers are, who they are not, and where untapped opportunities exist. These profiles are used to identify look-alike data among a firms target audience.

    • Behavioral Insights– Prospect profiles are then enriched with demographic and behavioral insights for lead generation purposes, as well as improving conversations, interactions, and engagements with targeted investors.

    • Marketing On-Demand – The process of automating marketing and communications is one of most valuable aspects of digital distribution, as it allows for the consistent communications and “on-demand” delivery of information, research, and investment related content. Once marketing and communication workflows are built, they can provide real time data on prospecting journeys and marketing effectiveness.

    • Sales Support – Updated data on sales and marketing is flowed into customer relationship technology (CRM). The CRM provides sales, marketing, and service teams with a 360° view of prospects and clients throughout the investor journey. Paired with marketing automation, this customer-centric approach improves prospect conversion, creates consistent communications, enhances investor engagement, and strengthens investor retention.

    • Laser Focused Targeting – Data-driven marketing, communications, conversion, and service advocacy playbooks include communication recommendations, channel preferences, unique needs, and individual service expectations of targeted investors. Artificial intelligence and third-party data provide personality specific, behavioral, and decision-making insights to aid in creating stage-specific content, as well as helping identify potential biases or hurdles a team may encounter with a prospective investor.

    • Multi-Channel Communications – Intent specific content can be curated across multiple channels to connect with and influence prospects and clients throughout each stage the investor journey (awareness, research, consideration, conversion, and advocacy). Marketing and communications are managed depending on the channel preference and communication styles of the targeted audience. Customized content is structured and organized for compliance approval and multi-stage usage.

    • Digital IR/PR – Digital IR/PR allows asset managers to stay connected with investors and prospects, critical initiatives for future fundraising efforts. Automating these functions eliminates the challenge of having current and potential investors slip through the cracks of manually executed IR/PR efforts.

    The Benefits are Clear

    According to Accenture’s recent study of 250 US based asset managers, a majority of those surveyed indicated a strong awareness of the benefits of digital adoption, however the initial expense and lack of technology expertise have kept many of those managers relying on antiquated distribution strategies, especially when compared to their data-enabled peers.

    Accenture – Future of Asset Management


    Today, nobody wants to be sold… including you. The days of dropping everything to take an unsolicited call are a thing of the past. Digital marketing and communications, often misperceived merely as tools to communicate with the masses, provide an effective way to engage and influence targeted investors without using the intrusive, annoying, and unwelcomed sales efforts that come from traditional distribution strategies.

    Digitally enabled asset managers are already experiencing meaningful results, including:

    a) Better qualified investor lead generation,

    b) deeper client engagement,

    c) higher asset retention rates, and

    d) lower overall fund distribution costs.

    Digital enablement has provided a runway for small to mid-sized asset managers to streamline operations, enhance investor engagement and compete head-to-head with the biggest firms in the industry. The biggest challenge lies in determining the best path to data-driven digital.