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The Road to AUM

An Interview with Sandra Powers Murphy

A podcast by SunStar Strategic

Jake Oxley: Welcome to SunStar Spotlight. This is your host, Jake Oxley and with me today is Sandra Powers Murphy, CEO of Noble Ark Ventures, a marketing and consulting firm and author of The Road to AUM; Driving Assets Under Management Through Effective Marketing and Sales.

How are you doing today Sandra?

Sandra Powers Murphy: Good. How are you, Jake?

Jake Oxley: I'm good. Can you give us a little bit about your background?

Sandra Powers Murphy: Sure. Well, I've been in the investment management business for 26 years, focused on investor education and marketing. It's always been my passion. I started my first firm in 2007, dedicated to marketing, consulting, and distribution and served as the Third Party Marketing Association as well. Really believing that investment managers not asset gatherers is what the market needs more of and so that's what we're focused on.

Jake Oxley: So I understand you have two companies then, Ark Global and Noble Ark Ventures, how do those two differ?

Sandra Powers Murphy: Sure. Well, Ark Global is an out-sourced strategic marketing, consulting and distribution partner to a limited number of niche investment management firms. That is a registered brokered dealer. It's also an investment advisor and we are MSRB registered and regulated, so we do all of the distribution activity at Ark Global.

But today I'm talking to you on behalf of Noble Ark Ventures, which is solely an education and consulting company. We don't provide any distribution and we don't provide any regulatory related advice. Noble Ark Ventures also published the book that I recently released, The Road to AUM.

Jake Oxley: That is awesome. Speaking of The Road to AUM could you tell me a little bit about the book? Like who it's ideally meant for and so forth?

Sandra Powers Murphy: Sure. Well, any investment management firm, marketing or sales professional will benefit from The Road to AUM. The whole point of the book was to get the perspective of the buyer. So I went out and spoke with 30-plus institutional research people who every day are screening managers to understand what they like, what they don't like, what's helpful, factors related to timing. What this book does it tells investment managers what the market won't. It tells them what it is that they're missing and it quite literally gives you a roadmap to be able to come up with the right game plan. It's probably the cheapest marketing around in terms of coming up with a framework for which to build out an efficient plan.

Jake Oxley: So what inspired you to write this book?

Sandra Powers Murphy: You know every single week Jake for the past ten years we get asked, "You know our performance is excellent, we're a great investment manager, why can't we raise more assets," is the number one question and why I named the book The Road to AUM. It really does answer that question because so many managers think that performance alone often looked at in a vacuum is the basis. They're very insular. What managers would benefit in sales and marketing teams will benefit from is understanding all of the factors that investors are taking into account when making an investment decision, which is much broader than any performance period alone.

Jake Oxley: According to recent Morningstar asset flow reports actively managed funds has been experiencing consistent outflows. How can asset managers still attract assets in the sea of declining dollars?

Sandra Powers Murphy: Jake that's a great question. There's lots of factor at work that are impacting the flows in-and-out of the market. Not only have we just been through an exceptional passive market over the past ten years, but there's been huge fee pressure on managers. There's also been a lot of platform rationalization with platforms deciding they don't as many share classes, they don't need as managers and as a result, it is very difficult for managers to get traction, particularly newer managers.

One of the things we think it's most important for managers to think about is really being tactical. Instead of trying to throw everything at the wall to really step back, determine the best attributes of the offering and where it fits in the portfolio and then identifying the best channels or platforms and really staying focused on that, as opposed to spreading yourself too thin. We find that when managers do that and they are very clear about their plan and their purpose they're most effective.

Jake Oxley: That makes a lot of sense. You said that performance alone is not enough to get a manager hired. What else would institutional investors be looking for?

Sandra Powers Murphy: That's a great question. So performance obviously is critical. If you don't have good performance over a long enough period of time, including market cycles, it's difficult for investors to select you over other managers. However, there's a number of other factors that are really important. One is the competitive terms. Is your price point right? Are the share classes correct? Are your minimums competitive?

The second is a clear value proposition. What is it that you do and that you do differently than other investment managers in the market or passive solutions in the market?

The third is consistent content and communications. Because once you determine that you've got the right offering and you're sure what your value proposition is and where it fits in a portfolio, you have to consistently and continuously tell that story in the market. And managers often want to rest on the heels of, "Well we've got great numbers. If we build it they will come," but unfortunately the market doesn’t work that way. You always have to be pushing out your story in a positive way to the right audience to be successful.

Jake Oxley: So of those three factors is there one that you might see asset managers struggling the most in?

Sandra Powers Murphy: You know ironically we could talk about the consistency of communications, because often managers will do a decent job with a fact sheet and a pitch book, but they won't engage things like PR, they won't engage things like more structured market, they won't produce enough content to tell their story. So what institutions, in particular, are looking for is to understand what is the thinking of that manager? They can't tell what you're thinking by your numbers. They can tell what you're thinking when you're talking about things you're passionate about whether it be a sector, an industry, a security, a trend in the market, anything that helps demonstrate what you do and do differently.

However, in answer to your question I actually think the number one thing a manager needs to do better is to think about whether their offering is truly competitive in the space they want to be in. So oftentimes managers will compare their performance to a much bigger manager, but they're going in at a much higher fee point than other newer entries in the market. And they don't have the AUM to offset that or they don't have the track record to offset that.

So really looking at the competitive nature of the market. We suggest that managers look at at least ten competitors in their space and create a matrix that they run as often as daily to just keep the sales team updated on how AUM is changing, what the fee levels are, what the performance is looking like so that they can get a better sense what share classes are being offered, what platforms these strategies are available on. That is what can keep you much more aware of the competition, better able to position yourself, and more likely to win assets.

Jake Oxley: All right. Are there any other tips that you might give to asset managers who are looking to attract more institutional investors?

Sandra Powers Murphy: It may be counterintuitive because this is the road to AUM, but that's what the book is about, but we think managers often should take that first step back. What the book does is it really gives a game plan blueprint so managers can take a step back and make sure the team's on the same page. Often what we find is the portfolio manager has one view, but the sales and marketing team has a slightly different view, senior management may have yet another view. So getting everyone on the same page aware of the strategy's strengths and it challenges and positioned accordingly in terms of what channels and where they're going to be marketed and then consistently applying that strategy, committing to it for a good two to three years, not for six months, but for a good two to three years. That's what we find makes the most successful outcomes.

Jake Oxley: What is the one step you suggest all managers take at this time regardless of where they are in the process and how much success they have to date?

Sandra Powers Murphy: Well in addition to reading the book I would say memorialize the game plan, because it's one thing to talk about it amongst your team, it is very different when teams put on paper what their commitment is; exactly what the dollars and resources are going to be applied to each stage. The book actually has matrices that managers can use to lay out what it is they need to be doing. And if you put that on the bulletin board in the office, on the whiteboard, in print and you're checking-in with that game plan every quarter over a two-year period you're much more likely to be successful.

Otherwise what happens is, you try a few things. You get a few months in, you're not confident in the results, you make some changes. So having that formalized game plan in writing that the entire team signs off on is the number thing we would suggest to make sure managers have the right offering, they're going to the right channels, and they have the right level resources and commitment to get the job done.

Jake Oxley: So it sounds like it's really a working book you know, at least alongside with the asset managers using it.

Sandra Powers Murphy: Absolutely.

Jake Oxley: What do you think is the biggest misconception investment managers have when marketing their product?

Sandra Powers Murphy: Well probably that their product is different. I mean what's wonderful about managers is that they're passionate. That they believe that what they do is really unique and different and value-add. And it is, but it's often not different enough to overcome other obstacles, whether it be time in market, AUM, fees charged, minimums, or even performance over certain periods. So managers who believe that they are different have to do a great job articulating that difference and then over time building a case for that through good communications and content.

Jake Oxley: If anybody is interested in finding out more about you, Ark Global, or Noble Ark Ventures or the book, The Road to AUM where should they look?

Sandra Powers Murphy: Sure great question Jake. So noblearkventures.com will provide access to all of those things. The book is available at Amazon, Barnes & Noble. It's available at Audible, eBook, Kindle. So if you don't want to read it certainly pick up and listen to it on Audible.

But what is nice is there's a series again of exercises that teams can do together to really make sure they have a game plan that's going to be effective and efficient. Marketing doesn't have to cost too much, it can be done very efficiently and better with the right resources and by making sure that you're marketing plan and your PR plan, that all of these different components are really the most effective they can be from day one.

Jake Oxley: Thank you. That was Sandra Powers Murphy, CEO of Noble Ark Ventures and author of The Road to AUM: Driving Assets Under Management Through Effective Marketing and Sales.