Since the dawn of their industry, hedge funds have been precluded from advertising publicly. In light of this restriction, companies have built strong fund-raising machines and new business development operations out of their marketing function to ensure the continued flow of capital year-over-year. The ban on advertising has kept the role of brand low in the industry leaving funds’ reputation unguarded from episodic lapses in financial performance.
That’s what makes the SEC's recent ruling on hedge fund advertising so important.
In an industry where the financial bottom line has been the driving factor in reputation, sales and success, advertising is now giving hedge funds the opportunity to stand apart from the competition with something completely unique: brand.
Now, these funds, whose marketing functions have previously been built around business-development activity, must learn how to leverage new assets to help grow their business. Over the coming months many will rush to get a message out into market. However, those that resist the urge to move too quickly into advertising in favor of a more strategic and deliberate approach will see more sustained success.
We see three critical areas for hedge funds to focus on in the coming months.
First, hedge funds need to discover and crystallize what they stand for through a clear, relevant and differentiated brand promise built around the client. Tapping into deeper client needs, beyond the immediate financial return, is where firms will ultimately find a way to win the wallets of clients and prospects alike.
Second, is the development of a sustained talent strategy. The financial industry has always been in a war for talent, and the prospect of deeper brand building activity offers a new avenue to attract those in greatest demand. To the funds that can best articulate and operationalize a compelling talent value proposition go the spoils of the best and brightest.
Finally, hedge funds will need to find meaningful ways to connect with prospects and clients in order to deliver a richer customer experience. Big data, social media and new approaches to thought leadership all offer incredible brand building opportunities for hedge funds – the key is figuring out how to leverage them in a way that provides a seamless, value-adding experience.
There’s a great opportunity for success in the next few years if hedge funds realize these changes and act accordingly to stand apart from the competition. Though open waters bring a great deal of risk, those who learn to swim early will surely prove themselves leaders in the industry and pioneers going forward.
Dan Spiegel is Associate Director, Strategy and Tom Shanahan is Associate Consultant, Verbal Identity, Interbrand New York.