How to Allocate Your Budget for Growth in Three Steps

I see it all the time. Investment managers with good strategies and impressive track records just can’t seem to gain traction with institutional investors or financial advisors. Either firms have a tough time with distribution or senior management still holds on to outdated notions such as “if we build it, investors will come” and “good performance sells itself.”

But in an environment where it is harder than ever for active managers to break through the “wall of passive resistance,” even the most experienced investment managers need to effectively tell their good stories to the right prospects and clients consistently.

The largest investment managers spend millions on armies of sales people, digital marketers and public relations pros. But most smaller and mid sized firms have to be more focused and efficient with their allocations of dollars. One of the most common questions CEOs at these firms ask me is, “How do I get the biggest bang from my “growth strategy” buck?”

My answer? Think of your growth strategy spending like an investment. You want to make sure the money spent generates a reasonable rate of return in terms of brand awareness, leads, and closed deals. It’s unlikely you can do everything at once.

Building a Growth Strategy Investment Model

Imagine your growth strategy budget as a kind of tactical allocation model where dollars are divided among strategies to pay for services provided by either internal or external marketing, public relations and sales professionals.

These allocations may shift over time as the needs of the firm evolve and the dollar amounts will increase as you are more successful. Let’s look at how a hypothetical investment firm might adjust this spending during three typical phases.

The “Good First Impressions” Allocation

You wisely spend most of your resources on hiring quality investment managers and building a great track record for one or more of your funds or strategies. But your web site still looks like it was created in the pre-Y2K era and your marketing materials and pitch books are woefully outdated.

At this stage, you want to create a professional first impression among investors and intermediaries who find your firm through word of mouth.

Most of the growth strategy budget should be devoted to redesigning and rewriting your marketing and sales materials; updating your website to accommodate both desktop and mobile users; and creating a compelling investment narrative that explains the story behind your success.

This is also a good time to think about improving your content marketing efforts. Harness the expertise of your investment managers to create market commentaries and white papers that begin to position them as subject matter experts (SMEs) and convey your firm’s point of view. Your firm’s public relations resource can find ways to inexpensively place these pieces in trade publications and your salespeople can start distributing them to advisors and consultants to set the stage for future contacts.

Your key executives may be knocking on doors to generate interest. More than likely though you are responding to inquiries from platforms, former clients and prospects who stumbled on your investment story.

The “Lead with Expertise” Allocation

 While advisors and consultants always like to hear about active firms delivering solid returns, they’re not likely to let them in the door unless they’re aware of the people behind the performance. Assuming your marketing materials are in good shape, your priority should be to make your investment leaders and portfolio managers “household names.”

At this stage, public relations can consume a larger percentage of your growth strategy budget. Your public relations resources should be arranging interviews with obvious outlets like the Wall Street Journal and Bloomberg as well as the many print and online publications where investment professionals are likely to find you. They should also be arranging speaking opportunities at regional and national conferences.

Marketing spend can be focused on expanding the scope of value-added content offerings to include insight articles, manager videos, webinars and teleconferences, all of which can be aggressively promoted through social media. If done successfully, these initiatives should increase inquiries that your sales team can add to their pipelines. Judicious and targeted use of email marketing—promoting value-added content rather than products—will help to generate leads as well.

You may consider adding one or two sales people to proactively leverage their own relationships and knock on doors. This strategy becomes much more effective when your firm has a marketing infrastructure in place that results in a strong brand and credibility.

 The “Momentum” Allocation

If trade publications and TV business shows are frequently contacting your portfolio managers for quotes and interviews, performance is strong and your marketing efforts are generating a steady stream of qualified leads, your firm is one of the fortunate few to be in “momentum mode.”

There’s less pressure on your marketing resources to think of new ways to deliver leads, so their efforts may shift to more “business as usual” updating of existing content and continuing production of various forms of printed, online and multimedia content to keep audiences engaged. If you have the budget, you might want to experiment with print ads and native advertising placements in publications and websites targeting investment professionals.

Likewise, public relations specialists may no longer need to “cast the widest net” and can focus instead on finding additional media and speaking opportunities that deliver the best ROI.

You may want to shift marketing and public relations spend to add more salespeople and support staff such as proposal writers and consultant database specialists.

Creating the Right Mix

In an ideal world, you would be able to achieve your growth strategy objectives using in-house marketing, public relations and sales personnel. However, your location, compensation structure and business model may make it difficult to hire and retain these professionals.

Fortunately, these functions can be outsourced to experienced firms with deep strategic and creative marketing resources, and strong networks of journalists and platforms.

Of course, unlike asset allocations, there is no research equivalent of modern portfolio theory to project what the outcome of a growth strategy will be. But employing this approach may ensure that your budget is being directed to the right resources, in the right proportions, at the right time.

To learn more about creating an effective growth strategy for your firm, contact Dan Sondhelm at 703-597-3863.