Cerulli Associates’ latest report, European Marketing and Sales Organizations 2022: Redefining Success in a Changing Environment, finds that 76% of European asset managers polled believe that the importance of highlighting their environmental, social, and governance (ESG) capabilities in their marketing will increase either slightly or significantly over the next 12 to 24 months.

More than one-quarter (29%) of marketing executives at European asset managers consider building or enhancing their firms’ ESG reputation a strategic priority for the next two years. Asset managers’ sales departments have a similar focus—51% of managers see the need for a strong ESG proposition as a very important driver of change within sales teams. In addition, 47% note that ESG capability has been a key topic of their discussions with clients this year.

“The short-term credibility of ESG is at a crossroads in Europe, with managers challenged by relative underperformance and heightened regulatory scrutiny,” says Fabrizio Zumbo, director of European retail and wholesale research at Cerulli. “However, asset managers that have highly specialized ESG offerings and can combine clear and tailored ESG-related communication with strong compliance and reporting features will stand out in the long term.”

Another area that this year’s adverse market environment has brought into focus is the role client service plays in retaining business. Responsiveness to client requests is important to clients, according to (80%) of European asset managers and 75% believe that relationship management overall is a crucial element of the sales process. “Managers need to stay ahead of client concerns and should encourage their salespeople to communicate proactively with investors,” states Zumbo.

Managers suffering from short-term performance issues should focus on client support and transparent communication. More than half (55%) of European investors surveyed identify poor client service as a very important reason to terminate a relationship with an asset manager.

“Good client service starts with effective marketing and the marketing function can relieve some of the pressure sales teams face in the current environment,” adds Zumbo. “This will mean creating and publishing timely and tailored content that addresses the challenges clients face and provides robust answers to key questions they may have around the impact of macroeconomic headwinds and the future of ESG performance.”

The media is dominated by negative headlines and asset managers ultimately need to steer their clients’ attention back to their long-term investment objectives. Players that can provide the most effective client care, communication, and compelling long-term investment narratives will have an advantage when it comes to retaining client assets in the current volatile environment.