Is message differentiation truly a “Holy Grail” for asset managers? I don’t think so.
After all, the quest for the Holy Grail embodies a fruitless search for the unattainable. Differentiation is not so futile - after all, sometimes it can be easy.
To wit: A former client of mine is a boutique asset management firm located in Virginia. Several years ago they went into a finals presentation with a large Atlanta-based institution, competing against two global asset managers based in the Northeast.
My client won the account because, according to them, "they spoke the same language.” While all three firms had a compelling case, the decision was ultimately based on a completely subjective criterion: a shared cultural background. Their ability to differentiate themselves from much bigger, fuller service firms was predicated on the cultural affinity of one southern institution preferring to work with another.
That said, effectively differentiating oneself from its competition usually requires something more than saying “Nice to meet y’all,” rather than “Nice to meet you.”
It would be easier if decisions were always made with reliable dispassion; that we could create a calculation or an equation to ensure maximum differentiation in our messaging. But in the real world, the emotional component exists.
When a prospect thinks, “Wow – these guys are really different,” he or she is making a value judgment as much as a logical one. And in the real world, choosing between coequals often comes down to a gut feeling that tips the scales in favor of one firm over another.
So how can we put our thumb on the scale?
First, look critically at your own messaging, as well as that of your competitors. Understand that if your website looks and feels routine, and if your writing has a sterile tone and employs standard industry jargon, then you aren’t different – at least not in the eyes of your prospects.
And while most asset management firms would benefit from a more client- and prospect-focused discussion of “who we are, what we do, how we do it, and why we do it,” I think there is much more to it.
Differentiation is not solely a matter of phraseology and sound web design. It requires a great deal of introspection; about not just “How can we make ourselves seem different,” but “How we actually are different.”
One way to do so is to build the firm’s messaging around what is truly important to clients and prospects. In that vein, a firm committed to truly differentiating its message must have a clear self-awareness about their strengths and weaknesses, and how they affect clients. An interesting exercise would be to answer two questions with unflinching honesty:
1. At our best, how does our business benefit our clients?
2. At our worst, how does our approach hurt our clients?
The starkness of the second question decouples the impact an asset manager’s decisions can have on its clients from the gauzy euphemisms often used to sterilize the downsides of a particular strategy - how often have we read an asterisked bullet point at the bottom of a page which reads: “In periods of (fill in the blank) our portfolio performance may conceivably lag those of our established benchmarks.”
Frankly, these feel like weasel words that are used to shadow, rather than illuminate. They may differentiate your firm, but not in a good way.
In the end, however, there is no one-size-fits-all rule for effectively differentiating one asset management firm from another, so long as we remember one thing:
True differentiation comes, not solely from a clear description of an investment process or philosophy (though it helps), but from self-awareness and a client-focused articulation about how the combined uniqueness of a firm’s individuals creates something greater than the sum of its parts.