The short answer is, there’s no simple answer. But we think the first mistake to make is to treat ‘retail investors’ as some homogenous bunch – and even worse a homogenous bunch that do not really matter.
After all, “It’s the wealth managers that really matter, isn’t it, Hugo?”
Short answer to that one: No. Not anymore. It’s not just the professional investors that make the difference these days. Look at almost any investment trust share register and IFA’s are basically non-existent and wealth managers are flatlining or worse.
The only line going up in any meaningful way is the one showing the number of shares owned by the retail investors who are customers of Hargreaves Lansdown, AJ Bell Youinvest and Interactive Investor et al.
And therein lie the problems. First off, who are these retail investors anyway? And second, if they are the customers of the platforms, how do we as investment managers and/or investment trust boards communicate with them?
Well, the ‘who are they anyway?’ question is the key. Any basic marketing textbook will explain what segmentation is and how to do it. But if you don’t own the customer data it makes it harder, and asking the platforms to help might well be met with snorts of derision, even if you get the old marketing chequebook out.
But there are ways around this. First off, build your own database. Put something that investors really want behind a sign-up page. Capture their email, name, and address. Ask them if they are a retail investor and if they are actually invested in the trust they are enquiring about. The trick here is creating something (a piece of regular content, or an exclusive event for example) that makes the trade-off worthwhile for the investor to hand over their data – and you need to go to town promoting it.
Once you have a decent number of contacts you can then use that data to profile the kind of people you are attracting. There are plenty of reputable firms out there who can help you do this, and remain compliant with data protection rules.
Now you have a segmentation that will also tell you something about how to communicate with the different groups of people who buy, or might buy, your investment proposition. That insight is invaluable in deciding what your marketing activities should be (known in the business as the marketing mix). If it’s up and coming 30-something City types then that’s going to demand a different approach from 70-something wealthy retirees.
There’s another huge benefit to owning your own database too – you can always ask them what communications they really want. Revolutionary, we know! But asking your customers what they really, really want might yield some interesting results. Is it another fund manager talking head video? Or would they really rather you just got some quality, up-to-date performance data on your website?
Whatever the answer, don’t commit the cardinal sin of asking then not doing anything – you will have set an expectation change is afoot. Even better, communicate your findings and explain what you’re going to do. Your customers, and those that might be, will like you for it.
Author, Simon Longfellow, is an expert in investment marketing with over 25 years of experience working within the financial services industry. He is the Independent Director of Electric & General Investment Fund, and a non-executive Director of Columbia Threadneedle Global Managed Portfolio Trust – an investment trust investing in other investment trusts to provide shareholders with either growth or a regular income.