Move over fees, marketing is the new differentiator

Recent master trust marketing campaigns are breaking traditional advertising boundaries by acknowledging increasing consumer awareness of the platforms.

Master trust platforms are currently being branded with significant force, and a recent development has been the marketing of the products themselves, rather than the distributors or fund managers.

The advertising campaign behind Norwich Union’s Navigator master trust platform is a case in point.

The group’s $7 million advertising budget for 2002 is the biggest investment it has ever dedicated to marketing, according to Norwich Union Public Affairs group general manager Simon Morgan, and was the result of findings from a brand-tracking survey.

“We found the Navigator brand was not well recognised by the public, and so made a commitment to improve on that,” Morgan says.

The four-part television advertising campaign centres on the Navigator master trust platform, with each one highlighting the four key messages of the system — plan, choose, manage and track — as identified by Norwich Union.

“The ads are designed to target the over 45s with assets to invest,” Morgan says.

But are consumers ready for this new relationship with the product platform and an introduction directly via mass marketing?

After undertaking traditional advertising research, including presenting the concept with cartoon drawings followed by focus groups with feedback from both consumers and advisers, Morgan believes so.

“The ads are timely, given the rise and rise of master trusts, and they are also an education process for the public to learn that these products are available,” he says.

And the aim of the campaign, building brand awareness, seems to be working.

“Advisers are saying they have got clients walking in and saying ‘we want to know about Navigator’,” Morgan says.

From the adviser’s perspective, Morgan says feedback on the marketing strategy has been positive. He says those advisers surveyed have said they like the advertising campaign and have also identified its effectiveness. They see it as the next logical development in increasing the awareness of the master trust platform.

“It is [the advertising campaign] adding value to their businesses. Familiarity with a product is a good thing, and the bigger picture is the emergence of master trusts as a more mainstream product,” Morgan says.

However, will this type of product-specific marketing provide benefits for advisers in developing client relationships? Will these ads strengthen the position of the adviser on the value chain? And as the industry increases in competitiveness, is this kind of product marketing a way for distributors and fund managers to differentiate their offerings in the future?

According to Credit Suisse Asset Management (CSAM) national sales manager Clayton Coplestone, consumers still do not understand the value chain and the price of the financial planning process, including master trust and wrap platforms.

“[Consumers] still perceive master trust platforms as being just about consolidated reporting, but it is really an ancillary tool that helps the distributors more than the consumers,” Coplestone says.

Such an insight suggests an education push could be beneficial.

Coplestone says another differentiating factor of the future will be price. Financial planning and platforms are becoming commoditised, he says.

This awareness brings another of the industry’s long running debates into the forefront — the disclosure of fees.

A survey of managed investment consumers in July 2001, by Sweeny Research commissioned by the Investment and Financial Services Association (IFSA) showed while the level of fees charged was deemed an important issue, it was disclosure and transparency of these fees that was the main focus.

While 57 per cent of survey respondents felt the fees charged on managed investments were reasonable, only 57 per cent also agreed that they were confident their adviser had disclosed all fees and charges.

However, approximately one-third of consumers (32 per cent) did not understand the types of fees they were paying.

These issues are addressed in the recently released CSAM reportHypercompetition Part 2—Survivor: Outwit,Outplay, Outlast. The report identifies a number of consumer perspectives in the managed funds industry.

Coplestone says consumer sentiment revealed in the report suggests investors will begin to ask more questions, especially as the industry enters a third year of bad returns.

“To retain and attract clients, the financial planning industry must improve upon the consumers’ experiences. For those who have a brand advantage, then effort must be directed towards developing tangible trust and demonstrating a dedication towards the consumer,” the report says.

In part, the Navigator campaign has addressed these issues, taking up the call for greater investor education. Morgan says the advertising campaign was also developed as a result of the master trust’s newly developed platform, and to illustrate to its 2,500 regular users that the group is committed to its advisers.

“As we brought in the new platform, we wanted to show our commitment to advisers,” Morgan says.

BT Funds Management head of wrap distribution Sean West also identifies the message of education behind the marketing strategy of master trusts, not only for investors, but advisers as well.

While BT offers two services, both targeted to intermediaries, West says there is an emphasis on education primarily to the adviser, which is then passed on to investors.

The BT Wrap Service is targeted at the independent financial adviser market, while BT’s badged product offering is a service aimed at larger dealer groups.

West says while the advertising strategy of BT’s Wrap Service is focused on creating an awareness of the brand, it is also about educating the adviser.

“Advertising hasn’t been a major scene [in the industry overall] up to this point, but the platform is becoming a real decision-making point and advisers want to have the right platform behind them,” West says.

“We provide [advisers] with educational material to pass on to the investor. Wraps need to be compelling to the adviser, and to the investor as well, and you need to be able to equip the adviser to continue to educate their clients.”