How Asset Managers’ Thought Leadership Creates Value for Investors

Not everyone is convinced that an asset managers’ thought leadership content in its various guises–email, video, slides, events and long-form articles–can add value for its audience of investors.

According to critics, thought leadership amounts to a mundane, me-too effort that succeeds only in killing trees and filling pixels in a way that provides sales teams something to shove in front of prospects and clients–just like the competition does. While these naysayers may often be justified in their cynicism, especially regarding mediocre content, it’s not always the case: successful thought leadership can create value for investors.

Thought leadership, simply defined, is a company’s effort to communicate innovative and compelling analysis/information that proves useful to the audience, thus driving the business relationship forward. It’s necessarily differentiated from that of other firms, because it’s meant to support that particular company’s relationship with the intended audience (often a specific type of investor). The firm expends time and resources, and expects a return on the investment in the form of higher profits in the future. It’s a fine proposition for the manager, but what can it offer investors?

An asset manager’s thought leadership can deliver three kinds of value to investors:

  1. Technical value
  2. Personal value
  3. Social value

Knowledge, or technical value.

Financial markets evolve constantly, with new types of investment strategies and even asset classes emerging from the sheer force of innovation. Investing today is not the same game it was 50 years ago, wen investing in timber meant that you had a pile of wood, and quantitative computer models that generate buy/sell lists or machines that trade at fractions of a second were not readily available (to say the least).

Thought leadership provides investors with information about new strategies or product offerings, along with explanation of how they work and how to put those products to use within a broader investment plan. To be effective, it must be clear, well-structured, and explicitly tie the key messages to the investor’s objectives. Successful thought leadership in financial services hinges on investors’ needs and paints a full picture of both the risks and potential rewards linked to a given trend, strategy, or asset class.

Successful thought leadership in financial services hinges on investors’ needs and paints a full picture of both the risks and potential rewards linked to a given trend, strategy, or asset class.

Reassurance/confidence, or personal value.

It would be as mistake to categorize investors as simply rational. While sophisticated investors tend to be quite rational, comfortable with models and financial calculations, there is an emotional element to even the most rational psyches. Providing a case for investment or current macro economic analysis that supports their way of thinking can reassure them in feeling that they have made the right decision (to invest or not, choice of product, timing). The audience can use this confidence to persuade other people (especially other members of the decision-making unit such as investment committees) to accept their view.

Acknowledgement/notoriety, or social value.

Thought leadership can, and often should, engage the audience in the discussion. A case study, for example, where a firm goes out and interviews clients could be distributed as part of a thought leadership effort. The interviewee, giving answers if not also ideas, receives recognition of his/her peers. It also provides recognition that the company 1) really listens to its clients and 2) has experience addressing the needs of that type of investor.

Taking a look at these three kinds of value (technical, personal and social), the impact of thought leadership will vary depending on the particular audience member and the effort the firm makes to leverage the value created. In most cases whether a household or large institution, the investor is not a single person, and the decision-making process involves multiple individuals in multiple roles, such as those acting as a gatekeeper, providing advice, approving the final decision, etc. Whether it’s a member of an investment committee, an adviser, or even a spouse, the individual can make use of technical, personal, or social value—or a combination thereof—in the way they see fit.

Whether it’s a member of an investment committee, an adviser, or even a spouse, the individual can make use of technical, personal, or social value—or a combination thereof—in the way they see fit.

A company well-equipped to aid them in realizing this value will engage the audience by delivering pertinent content as part of a broader consultative selling process in order to grow the relationship. In financial terms, the consultative selling process backed by successful thought leadership can, but does not always, translate value into better financial performance (risk-adjusted return, better diversification, avoidance of loss) for the investor.

So, what do you think? Do you know of any other ways that asset managers’ thought leadership can create value for investors?