The big investment houses are aiming to shed their stuffy image in an attempt to exploit a new climate in which consumers are taking greater control of their finances.
Schroder Investment Management is the latest to join the likes of Fidelity, M&G, Perpetual and Jupiter re-engineering their brands for the direct sell to consumers. It has appointed agency Rapier to handle a &£12m advertising account (MW last week).
Schroder, first established in the UK nearly 200 years ago, has a high profile in the City but, like most, its consumer awareness is low.
Schroder UK retail marketing director Robert Higginbotham says: “Our brand has tremendous potential, with more breadth and depth than many of its competitors. We want to bring that expertise to life for the consumer. We believe there is an immense opportunity. In the US, more than 30 per cent of household savings are held in investment funds – in the UK, it’s five per cent.”
And with nearly 12 million people in the UK already owning stocks and shares, there are undoubtedly opportunities to exploit.
Investment houses have traditionally sold their products through intermediaries, such as independent financial advisers (IFAs), to whom they pay commission. Recently, they have also started to provide products to online fund “supermarkets”.
But the Government’s plans to make consumers more responsible for their own finances is sweeping through the dusty corridors of City institutions. As one City analyst says: “Specialist investment houses have seen the success of businesses such as Virgin Direct and Egg, and now they want a share of the market.”
But do these institutions – not exactly household names in the UK – have the expertise, or even the will, to turn themselves into “brands”?
One agency director says: “Investment companies have been talking about brand building for years, but they’ve never got round to it. There is potential – if only they could get their act together.
“Consumers are feeling more empowered to look after their own finances, and the move towards greater self-reliance gives them the chance to make more money.”
But David Gray, a partner at branding consultancy Creative Leap, warns: “A lot of these companies don’t have a brand: they have a name and a product and that’s all. They’ve never sold themselves on the strength of their brands – they sell on price and fund performance.”
Higginbotham admits there is a lot of work to be done but he believes performance is still important: “Schroder will still promote the performance of its products, but we believe we can underwrite that by building consumer confidence in our brand.”
Mike Ryder Richardson, head of client acquisitions at one of the largest companies, Fidelity, claims: “We have been running brand building ads for some time and are starting to see the benefits. We are the biggest provider of ISAs and unit trusts. We believe we are well placed – consumers will always go to investment professionals.”
But many observers say the real stumbling block is that marketing has never been seen as a crucial part of the business – and marketers rarely have a seat on the main board.
One agency director, whose agency handles a range of financial clients, says: “The whole sector is arse-about-face. They start with the products first, then look at how to sell them. If they want to become more consumer-focused, they will have to emulate the packaged goods companies and find out what consumers want before offering it.”
There is also a huge challenge in overcoming consumer apathy. There aren’t many other subjects that are guaranteed to send consumers off to sleep so quickly. Gray says: “Let’s face it – financial services is not the most exciting sector. It’s seen as dull, unemotional and untouchable; most companies are seen as unapproachable. It will be very hard to break down those barriers.”
Higginbotham concedes that in the past, marketing has been too technical, but says: “This is a complex area – you can’t dumb it down, but we must develop an approach that will appeal to all markets.”
The real challenge is to find a point of difference. After all, why would consumers go to these institutions when they can already go to the likes of Egg, Smile and Virgin Direct, which are seen as more approachable?
Only when they can do that, while at the same time finding a way to avoid alienating the IFAs, will they really be able to prise open the nation’s piggybanks.