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How Tech Helps Asset Managers Like ClearBridge Grow AUM

by Graig Norden
on March 13, 2017

How Tech Helps Asset Managers Like ClearBridge Grow AUM

Graig Norden is the President at Freewheel Marketing

Carl Spackler, the groundskeeper played by Bill Murray in Caddyshack, knew the value of having good intelligence. In describing how he would catch the gopher that was terrorizing Bushwood Country Club, he mused:

Licensed to kill gophers by the government of the United Nations. A man, free to kill gophers at will. To kill, you must know your enemy, and in this case my enemy is a varmint. And a varmint will never quitever. They're like the Viet CongVarmint Cong. So you have to fall back on superior intelligence and superior firepower. And that's all she wrote.

The varmint in this analogy is open to your own interpretation. However, FactSet recently cited Google's advertising strategy as a reflection of their superior intelligence and superior firepower because ad placements are consistent with each user’s search history. This has the effect of enhancing Google’s services. FactSet then ponders a world where investment managers could actively make product or service recommendations based on previous user searches.  

Freewheel Marketing believes this time has already come.

Our recent study evaluated over 250 registered investment advisors and asset managers to compare their use of marketing software and technology. A scoring algorithm was then applied, permitting the universe of firms to be ranked top to bottom. Each firm’s total score—or “Freewheel Score”—indicates the extent of their adoption of marketing technology. We believe that those firms with higher scores will grow AUM faster than those with lower scores, all else equal.

ClearBridge Investments is a quintessential example of a firm utilizing technology to enable it to make product recommendations based upon previous user behavior. Despite its AUM ranking 90th among the asset managers we evaluated, its Freewheel Score ranked 5th. Freewheel believes this simple fact represents a strategy that emphasizes innovation and that this will bolster ClearBridge’s ability to grow AUM faster than the competition.

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As part of the study, I sat down with ClearBridge’s CMO, Russell Mahland, to get his perspective on the matter. According to Mahland, the most beneficial result from leveraging technology is that investors are now speaking with a representative of ClearBridge much later in the buying process. This has corresponded with improved lead quality and increased sales velocity, as most of the prerequisite research is now conducted digitally. Conversely, the traditional RFP process has been completely obscured.

Building on the previous point, Mahland says “the buying process for institutional and retail investors is now indistinguishable in most respects.” In fact, he has seen extremely high engagement with blogs and videos among the institutional crowd. This flies in the face of conventional wisdom, so ClearBridge must be credited for its propensity towards innovation.

FactSet is prudent to look at Google for possibilities that may exist within financial services. In fact, ClearBridge’s culture of innovation is buoyed by executives that share a vision extending beyond the industry. This is a critical element of distinction from other firms that have advisors or portfolio managers that assume management positions, says Mahland.

ClearBridge’s Chief Executive Officer, Terrence Murphy, for example, was raised in the family business of advertising. So despite having spent the duration of his career in financial services, he has a keen eye for good marketing. Similarly, John Haller, Chief Information Officer & Head of Operations, previously worked for a software company. This experience, according to Mahland, has been instrumental in helping ClearBridge shift to a more technology-based approach in various aspects of the business, including marketing.

The final topic that we discussed was the rapidly changing nature of marketing roles. In his view, “the marketer has evolved from sales-supporter to revenue catalyst.” Marketing teams, therefore, must have a quantitative mindset, design and web development skills, and the ability to measure ROI.

Freewheel Marketing believes the marketing strategy of ClearBridge Investments is indicative of the inroads that a select group of investment managers have made to emulate Google. For others, it should be evidence that relying on the status quo will not be risk-free. The proliferation of technology-driven marketing solutions will be the biggest determinant of asset growth over the next 3 years. In other words, the cost of doing nothing will soon outweigh the cost of innovation.

In the end, the gopher was able to outsmart the idiot savant groundskeeper, but Bill Murray’s character did possess some valuable intuition. Those with superior intelligence and superior firepower are usually victorious.

And that’s all she wrote...