For asset managers in Europe, brand as an element of marketing and sales is growing in significance as the proliferation and commoditization of investment products makes it ever more difficult to compete solely on price or product, according to the latest The Cerulli Edge―Global Edition.

Research conducted by Cerulli found that brand and factors such as the quality of relationship management and client service are now key differentiators for fund selectors in Europe.

“Brand perception is difficult to define or quantify. In a bid to quantify the importance fund selectors attach to the more intangible elements of a value proposition, Cerulli has identified five main components of an asset manager’s brand. We called them the ‘five brand Ps’: product and services, people, processes, price, and promotion. Each category has multiple subcomponents,” says Fabrizio Zumbo, director of European asset and wealth management research at Cerulli.

Close to half of the asset managers Cerulli surveyed across Europe consider brand a very important element of sales and 48% believe that retail investors consider the quality of relationship management and client services highly valued subcomponents of brand. These include the stability of performance, responsible investment approach, innovative products, risk management, and value for money.

Brand perceptions vary by country and by investor channel. For example, in the U.K., the top three brand subcomponents that fund selectors value most are the strength of investment products, competitive fees, and stability of performance. Whereas in Germany, respondents prioritize the stability of the investment team, digital access and content, and investment products. In Italy, cost, stability of performance, and quality of client service are the top three.

“Asset managers should tailor their brand awareness efforts, taking into account the nuances that exist in different markets,” advises Zumbo.

Differences also exist between channels. For example, fund selectors at private banks tend to attach more importance to cost, quality of client service and relationship management, and responsible investment approach. In contrast, independent wealth managers’ fund selectors pay more attention to managers’ product ranges, the stability of the investment team, and innovation. Retail banks’ fund selectors prioritize cost, products and solutions, stability of performance, and quality of client service.

“The curation of asset manager brands tends to be centralized and takes place in head offices. However, firms should develop narratives that link their brands to the needs of different channels and markets,” says Zumbo, noting that many managers are redefining their communication approaches, focusing on personalizing content for specific audiences. “Tailoring branding efforts for different markets and channels will help managers differentiate their brands from those of their competitors,” he adds.

Other Findings:

• In the Asia-Pacific region, most of the distributors that Cerulli surveyed intend to launch environmental, social, and governance (ESG) products in the next two years. Distributors are also increasingly looking at asset managers’ ESG investment processes due to enhanced ESG fund regulations in the region. Governments’ pledges to achieve carbon peak and carbon neutrality have prompted managers to launch more carbon-related thematic products. Cerulli advises managers to also consider launching products that focus on other aspects of ESG, such as funds centered on the UN’s Sustainable Development Goals. Asset managers need to tailor product offerings to suit to investors’ preferences in the region’s different market.

• In the U.S., Cerulli research finds that mutual funds are the primary vehicle for retail intermediary advisors in terms of breadth and depth of use. Currently, more than 90% of financial advisors use mutual funds and the average client allocation is just less than 30%. Exchange-traded fund (ETF) use is still more limited in comparison to mutual funds, but is growing. Currently, advisors allocate 17.8% to exchange-traded funds, but expect that to climb to 20.7% by 2023.