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                                 The Cerulli ReportTM Release
  A s s o c i a t e s



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                         The Cerulli Report                            ...
TABLE OF CONTENTS



INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
REPORT...
INTERMEDIARY DISTRIBUTION AND MARKETING
STRATEGIES: CASE STUDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
Under the Brand Umbrella: Subbranding Considerations . . . . .106
Conveying the Message: Advertising and Other Avenues . ....
INDEX OF EXHIBITS

1. Largest 10 U.S. Mutual Fund Managers by AUM . . . . . . . . . . . . . . .23
2. Largest 10 U.S. Mutua...
30. Intermediary-Focused Asset Managers’ Emphasis on Web-Based
    Communications: Past, Present, Future, 2005 . . . . . ....
55. Asset Managers by Area to Which Retail Marketing Reports,
    2005 . . . . . . . . . . . . . . . . . . . . . . . . . ....
83. Asset Managers by Marketing Organizational Changes, 2005 . . . . .153
84. Relevance of Marketing Organizational Change...
REPORT SCOPE


         Asset Management: Next-Generation Strategic Marketing
                                            ...
It is intended to assist asset management executives in creating next-
generation strategic marketing organizations and is...
counsel on how marketers can shift from reactive and tactical to more
proactive and strategic marketing planning. The next...
METHODOLOGY


        This Cerulli Report, Asset Management: Next-Generation
Strategic Marketing Organizations, is the res...
SAMPLE SECTION
                   from

                                TM
           THE CERULLI REPORT
ASSET MANAGEMENT:...
product focused) brochures and white papers somewhat more than product-
specific brochures and fact sheets. Many intermedi...
staff. All of the corporate marketing group’s shared services (e.g., branding
and public relations) report into the head o...
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The Cerulli Report

  1. 1. C A C e r u l l i The Cerulli ReportTM Release A s s o c i a t e s August 2005 This report contains the Asset Management: Next-Generation Strategic Marketing following sections: • Introduction: Next Organizations Generation Marketing- “Marketing plan execution is now a high stakes game—88% rank message consistency as Evolution or Revolution greatest challenge.” • Intermediary Marketing: A Strategic Planning Framework This report explores how asset management firms market and distribute mutual funds through retail • Intermediary Distribution intermediaries. Asset managers are recognizing that mutual funds and performance are increasingly and Marketing Strategies: commoditized, and strategic marketing (meaning plan execution versus simply communication) is becoming the Case Studies tiebreaker. This report addresses best practices in intermediary marketing, distribution, and organizational • Breaking Through the Marketing Clutter: Tactics structures. and Tools • Branding and Advertising This report helps asset managers: • The Distribution Partnership • Synchronize investment, product, distribution, and marketing strategies • Intermediary Marketing Groups: Organizational • Define or refine intermediary marketing and distribution approaches Structure, Core Functions, • Evaluate the competitive landscape through case studies of marketers of varying sizes and Responsibilities • Version 2.1: The Next- • Understand how open architecture, professional buyers, and evolving advisor business practices are Generation Marketing impacting the role of intermediary marketing Organization • Prognosis: Tie-Breakers in This report helps marketing directors and managers: a Cluttered Marketplace • Reorient marketing to become more strategic and less tactical • Implement tools and tactics for breaking through the marketing clutter Table of contents, exhibit • Collaborate with distribution on advisor feedback and deploy value-added programs list, and sample pages • Study competitive organizational structures, identify requirements, and navigate changes are attached Data contained in this report: Related Cerulli Research: • Quantitative analysis is leveraged in part from a survey of intermediary marketing groups at U.S. asset Professional Buyers and management firms Manager Selection • Survey findings: outsourcing, functional allocation & headcount, marketing priorities, time and resource Revenue Sharing Among Mutual Funds: Current usage, advertising spending and media outlets Practices and Projected Implications To order this report or for more information, log on to our Website at www.cerulli.com or contact: CERULLI ASSOCIATES 575 BOYLSTON STREET Rachael Malatesta Thomas Marsh BOSTON, MA 02116 617-437-1098 x133 617-437-1098 x119 617-437-0084 tmarsh@cerulli.com rmalatesta@cerulli.com Price: US$8,000 WWW.CERULLI.COM Faxable order form attached
  2. 2. C A C e r u l l i A s s o c i a t e s The Cerulli Report TM Asset Management: Next-Generation Strategic Marketing G Organizations To purchase this report, fill out this form and fax to 617-437-1268 or visit our Website at Rachael Malatesta www.cerulli.com. 617-437-1098 x119 rmalatesta@cerulli.com Thomas Marsh Name: 617-437-1098 x133 tmarsh@cerulli.com Company: Address: Phone: Email: ____ The Cerulli Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .US$8,000 TM Asset Management: Next-Generation Strategic Marketing Organizations G ____ Add Analyst ACCESS* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,000 *The Cerulli ReportTM Analyst ACCESS Service extends for one year from date of purchase and includes: • Discussion of strategic and tactical initiatives related to intermediary marketing • Education on the dynamics of intermediary marketing CERULLI ASSOCIATES • Interpretation of relevant industry events 575 BOYLSTON STREET BOSTON, MA 02116 • Assistance in developing related industry presentations PHONE: 617-437-0084 FAX: 617-437-1268 WWW.CERULLI.COM File: Eblast 8/05
  3. 3. TABLE OF CONTENTS INDEX OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 REPORT SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Report Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Report Roadmap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 KEY FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Introduction: Next Generation Marketing - Evolution or Revolution . . .12 Intermediary Marketing: A Strategic Planning Framework . . . . . . . . . . .12 Breaking through The Marketing Clutter: Tactics and Tools . . . . . . . . . .13 Branding and Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 The Distribution Partnership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Intermediary Marketing Groups: Organizational Structure, Core Functions, and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Version 2.1: The Next-Generation Marketing Organization . . . . . . . . . .17 INTRODUCTION: NEXT-GENERATION MARKETING - EVOLUTION OR REVOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Defining Strategic Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Diagnosis: Mature Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Contenders at the Gate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Squash: Post-M&A Integration . . . . . . . . . . . . . . . . . . . . . . . . .24 Shifting Points of Influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Cautionary Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Platform Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Rising above the Clutter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 INTERMEDIARY MARKETING: A STRATEGIC PLANNING FRAMEWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Strategic Drivers: What Determines the Marketing Plan? . . . . . . . . . . . .32 Investment Manufacturing Strategy . . . . . . . . . . . . . . . . . . . . . .33 Product Development Strategy . . . . . . . . . . . . . . . . . . . . . . . . . .36 Distribution Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Marketing Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Themes in Marketing Strategies . . . . . . . . . . . . . . . . . . . . . . . . .42 The Role of Market Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44 Investor-Focused Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Advisory Councils . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 C A Asset Management: Next-Generation Strategic Marketing Organizations 1
  4. 4. INTERMEDIARY DISTRIBUTION AND MARKETING STRATEGIES: CASE STUDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 Harvesting Marketing Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . .52 Leveraging Its Niche Style: Rydex . . . . . . . . . . . . . . . . . . . . . .52 Best-of-Breed Multiaffiliate Marketer: AMG . . . . . . . . . . . . . .54 Marketing Strategy with a Conscience: Calvert . . . . . . . . . . . . .55 Fast-Track Product Line Diversification: Pioneer . . . . . . . . . . .56 Staying the Course: American Funds . . . . . . . . . . . . . . . . . . . . .58 Nature versus Nurture: Tending Marketing Challenges . . . . . . . . . . . . . .60 Navigating Integration: Columbia Management Group . . . . . .60 Scandal and the Strategic Handoff: Old Mutual Capital . . . . . .62 Hampered by Capacity Constraints: First Eagle Funds . . . . . . .63 Nurturing Product Development: SunAmerica . . . . . . . . . . . . .64 Cultivating Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .66 Strategic Distributor Alliances: Russell Investments . . . . . . . . .66 Distribution Outsourcer: Julius Baer . . . . . . . . . . . . . . . . . . . . .67 RIA-Channel-Focused: ABN Amro Funds . . . . . . . . . . . . . . . .68 Exit Stage Left: UBS Asset Management . . . . . . . . . . . . . . . . .70 Marketing Alchemy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 BREAKING THROUGH THE MARKETING CLUTTER: TACTICS AND TOOLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 The Marketing Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74 The End of Shelf Space As We Know It . . . . . . . . . . . . . . . . . .74 The Toolbox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Segmentation and Target Marketing . . . . . . . . . . . . . . . . . . . . .76 Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 Categories of Marketing Materials . . . . . . . . . . . . . . . . . . . . . . .78 Customized Literature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 Product Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82 Value-Added Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 E-Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88 Websites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .88 On-Demand Client Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . .89 Advisor and Investor Education via Websites . . . . . . . . . . . . . .89 E-Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90 BRANDING AND ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . . .93 Branding Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .95 Does Brand Matter? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 Portfolio Manager Tenure and Visibility: Impact on Brand . . . .100 Brand Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103 Taglines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104 2 Asset Management: Next-Generation Strategic Marketing Organizations C A
  5. 5. Under the Brand Umbrella: Subbranding Considerations . . . . .106 Conveying the Message: Advertising and Other Avenues . . . . . . . . . . . .109 Advertising Spending and Media Outlets . . . . . . . . . . . . . . . . .109 Public Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .116 Events and Sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118 THE DISTRIBUTION PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . .120 Channel and Key Account Management . . . . . . . . . . . . . . . . . . . . . . . . .121 Wholesaler Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124 Specialists and Portfolio Analytics Teams . . . . . . . . . . . . . . . . . . . . . . . .125 INTERMEDIARY MARKETING GROUPS: ORGANIZATIONAL STRUCTURE, CORE FUNCTIONS, AND RESPONSIBILITIES .127 Current State Organizational Structures . . . . . . . . . . . . . . . . . . . . . . . . . .128 The Role of Corporate Marketing . . . . . . . . . . . . . . . . . . . . . . .128 Chain of Command . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130 Locale and Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132 Silos of Expertise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134 Size of Staff, Number of Direct Reports . . . . . . . . . . . . . . . . . .135 Roles and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138 Core Functions Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .138 Functional Alignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140 Headcount by Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142 Day-to-Day Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146 Marketing Committees and Other Forums . . . . . . . . . . . . . . . . .147 Outsourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149 VERSION 2.1: THE NEXT-GENERATION MARKETING ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .152 Organizational Trends and Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .153 Implications of Organizational Modifications . . . . . . . . . . . . . .154 Impetus to Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .156 Organizational Advocates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .158 Identifying the Optimal Marketing Structure . . . . . . . . . . . . . . . . . . . . . .160 Situation Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .160 Resource Requirements: Now and in the Future . . . . . . . . . . . .162 Identifying the Optimal Organizational Structure . . . . . . . . . . .163 Transitioning the Marketing Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164 PROGNOSIS: TIE-BREAKERS IN A CLUTTERED MARKETPLACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167 GLOSSARY OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .169 INDEX OF COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .172 C A Asset Management: Next-Generation Strategic Marketing Organizations 3
  6. 6. INDEX OF EXHIBITS 1. Largest 10 U.S. Mutual Fund Managers by AUM . . . . . . . . . . . . . . .23 2. Largest 10 U.S. Mutual Fund Managers by Net New Inflow . . . . . . .23 3. Asset Managers’ Number of Current Revenue-Sharing Deals, 2004 . .27 4. The Four Pillars of Asset Management Intermediary Delivery Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 5. Asset Managers’ Manufacturing Strategies, 2005 . . . . . . . . . . . . . . . .35 6. The Five Stages of the Product Governance Process . . . . . . . . . . . . . .36 7. Strategy and Product Review Considerations . . . . . . . . . . . . . . . . . . .37 8. Asset Manager Segmentation by Advisors or Investors, 2005 . . . . . . .38 9. Asset Manager Segmentation of Intermediary Marketplace by Channel or Firm, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 10. Top Broker/Dealer Firms by Headcount, 2004 . . . . . . . . . . . . . . . . .40 11. Intermediary Marketing Strategy Framework . . . . . . . . . . . . . . . . . .42 12. Asset Managers Rank Sources of Market Intelligence for Guiding Marketing Strategy; Weighted by Importance, 2005 . . . . . . . . . . . . .45 13. Examples of Data-Gathering Potential from Web-based Surveys . .47 14. Rydex Investments Financial Professional Registration Screen . . . .48 15. Funds with Morningstar four- and five-Star Ratings by Objective, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 16. Pioneer’s Fund Adoptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 17. Pioneer’s “Strength Across the Board” Website Marketing . . . . . . . .57 18. First Eagle Fund Lineup, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 19. SunAmerica’s Four Intermediary-Distributed Product Lines, 2005 .65 20. ABN Amro Investment Style Offerings, 2005 . . . . . . . . . . . . . . . . .70 21. Asset Managers’ Rankings for Current Areas of Marketing Emphasis, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73 22. The Intermediary Marketer’s Toolbox . . . . . . . . . . . . . . . . . . . . . . . .75 23. Intermediary-Focused Asset Managers’ Emphasis on Literature: Past, Present, Future, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78 24. Asset Managers’ Emphasis on Specific Types of Marketing Materials: Past, Present, Future, 2005 . . . . . . . . . . . . . . . . . . . . . . . .79 25. Asset Managers’ Marketing Materials Ranked by Resource Requirements, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80 26. Asset Managers’ Customization of Marketing Materials for Channels or Individual Firms, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . .81 27. Intermediary-Focused Asset Managers’ Emphasis on Product Positioning: Past, Present, Future, 2005 . . . . . . . . . . . . . . . . . . . . . . .83 28. Types of Value-Added Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 29. Intermediary-Focused Asset Managers’ Emphasis on Value-Added Programs: Past, Present, Future, 2005 . . . . . . . . . . . . . . . . . . . . . . . .87 4 Asset Management: Next-Generation Strategic Marketing Organizations C A
  7. 7. 30. Intermediary-Focused Asset Managers’ Emphasis on Web-Based Communications: Past, Present, Future, 2005 . . . . . . . . . . . . . . . . . .88 31. Intermediary-Focused Asset Managers’ Emphasis on Branding, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94 32. Professional Buyer Research Criteria By Level of Importance, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 33. Professional Buyers Rank Reasons Why Managers Are Fired, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102 34. Examples of Asset Manager Taglines . . . . . . . . . . . . . . . . . . . . . . . .105 35. Asset Managers with Single- versus Multi-Brand Strategies, 2005 . .106 36. Examples of Asset Managers’ Many Brands . . . . . . . . . . . . . . . . . . .107 37. Asset Managers Indicating Plans to Convert Brand Strategy, 2005 . .108 38. Intermediary-Focused Asset Managers’ Emphasis on Advertising, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111 39. Intermediary-Focused Asset Managers’ Emphasis on Advertising: Past, Present, Future, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111 40. Total Advertising Spending by top 15 Mutual Fund Managers (US$ millions), 2003 vs. 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .112 41. Top 15 Mutual Fund Managers by Advertising Spending (US$ millions), 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 42. Top 15 Mutual Fund Managers by Advertising Spending (US$ millions), 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 43. Top 5 Mutual Fund Managers by Advertising Spending (US$ millions), 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .113 44. Top 5 Mutual Fund Managers in Advertising Spending (US$ millions), 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114 45. Advertising Spending by Media Category (US$ millions), 2003 vs. 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .115 46. Advertising Spending by Media Category and Top Five Mutual Fund Managers in TV Advertising Spending (US$ millions), 2004 .115 47. Intermediary-Focused Asset Managers’ Emphasis on Public Relations, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117 48. Intermediary-Focused Asset Managers’ Emphasis on Public Relations: Past, Present, Future, 2005 . . . . . . . . . . . . . . . . . . . . . . . .117 49. Size of Advisor Marketplace by Channel, 2004 . . . . . . . . . . . . . . . . .121 50. Fee-Based versus Commission-Based Advisors Rate Asset Manager Attributes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .123 51. Portfolio Analytics Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126 52. Area Responsible for Firmwide Marketing: Corporate versus Retail, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129 53. Corporate Marketing’s Shared Functions . . . . . . . . . . . . . . . . . . . . . .130 54. Intermediary Marketing’s Reporting Structure: Direct to Business Unit Head, Dotted Line to Corporate Marketing . . . . . . . . . . . . . . . .130 C A Asset Management: Next-Generation Strategic Marketing Organizations 5
  8. 8. 55. Asset Managers by Area to Which Retail Marketing Reports, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .131 56. Market Communications Dotted Line Reporting to Corporate Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .131 57. Asset Managers by Title of Executive in Charge of Retail Marketing, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132 58. Marketing: Centralized vs. Decentralized, 2005 . . . . . . . . . . . . . . . .133 59. Geographic Impact on Marketing Centralization, 2005 . . . . . . . . . .133 60. Centralized Marketing Group, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . .134 61. Asset Managers by Number of Full-Time Employees in Retail Marketing Groups, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136 62. Head of Marketing: Number of Direct Reports, 2005 . . . . . . . . . . . .136 63. Large Intermediary Marketing Staff with Four Core Areas . . . . . . . .137 64. Small Intermediary Marketing Staff with Four Core Areas . . . . . . . .137 65. Intermediary Marketing Functions . . . . . . . . . . . . . . . . . . . . . . . . . . .139 66. Asset Managers with Dedicated Marketing-Related Functions, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .140 67. Functions Reporting into Marketing, 2005 . . . . . . . . . . . . . . . . . . . .141 68. Mid-Size Asset Manager’s Intermediary-Focused Strategic Marketing Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .141 69. Conveying a Consistent Marketing Message: Greatest Challenges to Current Marketing Organizational Structure, 2005 . . . . . . . . . . . .142 70. Asset Managers’ Headcount by Functional Area, 2005 . . . . . . . . . . .142 71. Mid-Size Asset Manager’s Marketing Communications Team . . . . .143 72. Marketing Organization of Asset Manager with Direct and Intermediary Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .144 73. Bank-Owned Asset Manager’s Product Management and Strategic Marketing Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . .145 74. E-Commerce Group Organizational Chart . . . . . . . . . . . . . . . . . . . . .146 75. Asset Managers with Marketing Committees, 2005 . . . . . . . . . . . . .147 76. Asset Managers by Marketing Committee Meeting Frequency, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .148 77. Ad Hoc Marketing Strategy, Brainstorming, and Planning Meetings, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .148 78. Asset Managers by Number of Marketing Committee Members, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149 79. Areas Represented on Marketing Committees, 2005 . . . . . . . . . . . . .149 80. Marketing Groups Currently Outsourcing Select Marketing Activities, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150 81. Marketing Groups Currently Outsourcing by Type of Marketing Activities, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .150 82. Marketing Groups by Future Outsourcing Plans, 2005 . . . . . . . . . . .151 6 Asset Management: Next-Generation Strategic Marketing Organizations C A
  9. 9. 83. Asset Managers by Marketing Organizational Changes, 2005 . . . . .153 84. Relevance of Marketing Organizational Changes, 2005 . . . . . . . . . .154 85. Strategic vs. Tactical Organizational Changes, 2005 . . . . . . . . . . . . .155 86. Trends and Issues Driving Organizational Changes, 2005 . . . . . . . .156 87. Greatest Challenges to Current Marketing Organizational Structure, Weighted Average, 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . .157 88. Greatest Advocates for Marketing Organizational Changes, 2005 . .159 89. Strategic Framework for Marketing Organization Evaluation . . . . . .161 90. Marketing Areas that Require Greatest Time and Resources . . . . . . .162 91. Sample Organizational Resource Assessment . . . . . . . . . . . . . . . . . .163 92. Example of Organizational Structure Planning Process . . . . . . . . . . .164 C A Asset Management: Next-Generation Strategic Marketing Organizations 7
  10. 10. REPORT SCOPE Asset Management: Next-Generation Strategic Marketing ™ Organizations is the first study in The Cerulli Report™ series to focus on the evolution of retail intermediary marketing. Fierce competition for assets, regulatory pressure, blurring lines among channels of distribution, greater focus on organizational efficiency, and a host of other issues are influencing intermediary marketing and distribution in asset management firms. Intermediary-focused mutual fund marketing groups are endeavoring to become more strategic and less tactical; in order to do this, they need to reorganize and reorient. The size, scope, and heritage of these asset managers, as well as their tenure in the intermediary marketplace, affect the emphasis they place on—and resources they commit to—marketing. This is evidenced by their wide range of strategies, tactical approaches, and organi- zational deployment. This report identifies the traits that CA believes will characterize next-generation strategic marketing organizations. Cerulli Associates embarked on this study as a result of client interest in this topic, and on our assessment of the principal trends influencing inter- mediary marketing and distribution. Cerulli Associates believes that as the financial services industry becomes more complex and competitive, asset managers need to pay close attention to how they articulate their investment story, differentiate their products, deploy their resources, and structure their marketing organizations in order to best leverage their capabilities and pursue evolving marketplace opportunities. Report Beneficiaries This Cerulli Report addresses the three topical areas of intermediary marketing: • marketing and distribution strategy; • marketing tools and tactics (literature, value-added programs, e- commerce, sponsorship, branding and positioning, advertising, segmentation, and wholesaling); • and intermediary marketing organizational structure and change. 8 Asset Management: Next-Generation Strategic Marketing Organizations C A
  11. 11. It is intended to assist asset management executives in creating next- generation strategic marketing organizations and is aimed at the following constituencies: • Senior management at small and mid-size asset managers that are contemplating entering the intermediary-distributed mutual fund marketplace. • Heads of mutual fund groups and national sales managers who are expanding, or refining, their marketing and distribution efforts in the intermediary marketplace. • Strategic marketing directors and marketing communications managers that are working to reorient their marketing groups in order to make them more strategic and less tactical. Report Roadmap Asset Management: Next-Generation Strategic Marketing Organizations examines three core topics: • marketing and distribution strategy, • marketing tools and tactics, • intermediary marketing organizational structure and change. The report consists of nine sections: The first section, Introduction: Next-Generation Marketing— Evolution or Revolution explores the forces of change that are setting the stage for the next generation of intermediary marketing strategies. The report then delves into the first of its three core topics, marketing and distribution strategy, and is divided into two sections. The first of these sections, Intermediary Marketing: A Strategic Planning Framework provides a roadmap for defining and refining marketing strategy, and offers C A Asset Management: Next-Generation Strategic Marketing Organizations 9
  12. 12. counsel on how marketers can shift from reactive and tactical to more proactive and strategic marketing planning. The next section, Intermediary Marketing and Distribution Strategies: Case Studies, presents 13 case studies of small, mid-size, and large asset managers’ strategies and tactics. The second of the three core topics, marketing tools and tactics, includes three sections: Breaking through the Marketing Clutter: Tools and Tactics, Branding and Advertising, and The Distribution Partnership. This segment of the report studies the types of tools available to intermediary marketers, from literature and value-added programs to target marketing and e-commerce. Cerulli also presents its findings of the types of branding and positioning initiatives asset managers are implementing, including specific examples of advertising strategies, the use of taglines and fund naming conventions. The last segment in the marketing tools and tactics component concludes by presenting insights into asset managers’ distribution channel segmentation and wholesaler deployment, and how marketing and distribution groups collaborate. The third report topic, intermediary marketing organizational structure and change, is covered in two sections, Organizational Structure, Core Functions and Responsibilities, and Building an Effective Marketing Organization. In these segments, Cerulli provides data on the number of personnel employed by intermediary marketing groups and presents a number of organization charts. This section concludes with insights and statistics on the types of organizational changes currently trans- forming marketing groups. We review how the traditional role of marketing in some organizations is evolving and its impact on organizational structure. A final section, Prognosis: Marketing as the Tiebreaker, concludes the report, summarizing CA’s insights into the impact of marketplace changes on intermediary asset management marketing and distribution, and predicting how the next generation of strategic marketing organizations may unfold. 10 Asset Management: Next-Generation Strategic Marketing Organizations C A
  13. 13. METHODOLOGY This Cerulli Report, Asset Management: Next-Generation Strategic Marketing Organizations, is the result of detailed market analysis conducted by Cerulli Associates. This research report explores how asset management firms market and distribute mutual funds through retail inter- mediaries, and how this is evolving in response to ongoing marketplace developments. The study pays particular attention to the array of intermedi- ary marketing and distribution tactics, the organizational structures used, and the best practices that we observed within intermediary marketing and distri- bution groups. Both our quantitative and qualitative analysis are made possible through the cooperation of more than 40 asset management executives within intermediary marketing and sales organizations. Quantitative Data The quantitative component of this report is primarily based on a proprietary survey of intermediary marketing groups within U.S. asset management firms, and also incorporates data from other recent CA surveys. CA administers its surveys through our proprietary data-gathering engine at www.cerullisurveys.com. Qualitative Research Cerulli Associates’ qualitative analyses are based on research interviews, our own market insights, and further examination and vetting of various proprietary and third-party information sources. For this report, CA analysts interviewed executives at asset management firms of various sizes, including personnel involved with intermediary marketing, product management and development, key account management, and sales. We focused primarily on mutual fund marketing, but also examined variable annuity and other packaged product marketing strategies to complement this research. All of these conversations reinforced the findings of our survey work and provided additional valuable insights reflected in this study. It is the policy of Cerulli Associates to conduct interviews for background purposes only and not for attribution. As with all Cerulli Reports, additional information in this report was obtained from third-party public and noncon- fidential sources that Cerulli Associates believes to be reliable and has made every reasonable attempt to verify; however, CA does not guarantee its accuracy or completeness. C A Asset Management: Next-Generation Strategic Marketing Organizations 11
  14. 14. SAMPLE SECTION from TM THE CERULLI REPORT ASSET MANAGEMENT: NEXT-GENERATION STRATEGIC MARKETING ORGANIZATIONS
  15. 15. product focused) brochures and white papers somewhat more than product- specific brochures and fact sheets. Many intermediary marketers report that they have already begun to retool their marketing communications programs as they respond to advisor demands to stop pushing product and start helping them build their businesses. One marketing executive noted that fact sheets had become more important in recent years as advisors have sought more quantitative data. Product-specific brochures rank as the most resource-intensive component of literature programs. Some firms with limited resources choose to rely on fact sheets instead. There is also a contingent of small, resource- constrained asset managers that hope that more sizeable future budgets will enable them to expand their bare-bones literature programs beyond economical fact sheets to more costly but compelling glossy brochures. Marketers report that they have spent more time creating and fine- tuning PowerPoint presentations for their key account managers and wholesalers in recent years—both in an effort to ensure regulatory compliance and convey a consistent story. The workload in this area appears to be leveling off as marketers catch up with the backlog of presentation creation and move into maintenance and updating mode. EXHIBIT 24 ASSET MANAGERS’ EMPHASIS ON SPECIFIC TYPES OF MARKETING MATERIALS: PAST, PRESENT, FUTURE, 2005 25.0% 20.3% 19.8% 19.3% 20.0% 18.5% 18.0% 17.3% 17.3% 16.5% 15.4% 15.4% 14.5% 15.0% 14.0% 14.2% 12.2% 11.5% 10.1% 9.8% 9.5% 9.4% 10.0% 8.1% 7.0% 5.0% 1.7% 0.3% 0.0% 0.0% Product-specific Fact Non-product- PowerPoint Web-based Annual White Other brochures sheets specific presentations communication reports papers brochures Past Present Future Source: Cerulli Associates C A Asset Management: Next-Generation Strategic Marketing Organizations 79
  16. 16. staff. All of the corporate marketing group’s shared services (e.g., branding and public relations) report into the head of corporate marketing, and operate as an internal agency. EXHIBIT 53 CORPORATE MARKETING’S SHARED FUNCTIONS Head of Corporate/Shared Marketing Functions Public Relations Branding Advertising Product Product Management Development Source: Cerulli Associates EXHIBIT 54 INTERMEDIARY MARKETING’S REPORTING STRUCTURE: DIRECT TO BUSINESS UNIT HEAD, DOTTED LINE TO CORPORATE MARKETING Head of Corporate Marketing (shared functions) Head of Direct Business Head of Intermediary Business Head of Retail Direct Marketing Head of Retail Third-Party Marketing Marketing Communications Marketing Communications Source: Cerulli Associates Chain of Command Although many intermediary marketing groups work, in some capacity, with corporate marketing, most do not report straight into corporate marketing. Most retail marketing groups reside within the asset management unit, reporting to the CEO, COO, or president of the mutual fund group. The intermediary marketers we interviewed prefer this reporting structure; reporting into executive management places them on equal footing with the head of sales and distribution, providing them the seniority and independence to maintain a more strategic, long-term approach to marketing. By contrast, a few of the marketing directors we interviewed that report to a sales manager function expressed concern that they were operating in a highly tactical and reactive mode. CA asserts that reporting hierarchy, and title or influence within the organization, are among the most influential elements impacting intermediary marketing directors’ ability to operate their groups strategically. 130 Asset Management: Next-Generation Strategic Marketing Organizations C A

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