By Mash Patel, CEO of Kurtosys

It’s a tough time to be a fund manager. Forthcoming regulatory updates darken the horizon, necessitating changes to processes and the streamlining of operations. Digital transformation projects further complicate the mix and impact the bottom line. All this, of course, has to be dealt with while the age-old problem of increasing AUM (assets under management) persists.

Against this backdrop, the very nature of asset management is changing. Passive funds are increasingly taking business away from the more traditional, active models of investment. Client expectations are also shifting – customers want a more switched-on, real-time experience, having become used to these principles in other areas such as retail banking, entertainment and transport.

Overall, the outlook is uncertain for much of the industry. But it seems to me that right now there is also a big opportunity for fund managers to tap into a new audience, and connect with people who have typically not been their customers in the past.

The reason that many people don’t have any kind of relationship with asset managers is because they think that it is not for them. Terms such as ‘wealth management’ are problematic, as there is a strong association with the concept of being ‘rich’, which most people do not consider themselves to be. Other terms commonly used within the industry are almost impenetrable to outsiders – many people don’t know a Redemption Yield from a Running Yield, for example. And why should they?

But it is the overuse of this kind of language that perpetuates the myth that asset management is the preserve of the elite. A survey from 2016 conducted by Visible Thread found that 98% of the asset management companies that it examined failed to meet clear language standards. Using unnecessarily opaque language to communicate what is already a complex subject puts it further out of the reach of everyday people.

It is clear, then, that asset management needs to reinvent itself in order to establish a connection with this very large potential customer base. There are millions of people out there who want to build up a healthy pension pot for their retirement but don’t know where to start, and with many IFAs reluctant to work with those starting with a fairly modest fund, asset managers need to establish a direct connection to them.

While many asset managers will point to their existing outbound marketing efforts to build their brand – after all, there are very few sporting events that don’t have a big name sponsor from the industry – how many of the spectators or people watching on TV would be able to tell you exactly what it is that these companies do, or understand what the company could do for them?

With the marketing budget blown on sponsorship and outreach to channel partners, little is left over for brand awareness amongst consumers. The result of this is that an ordinary member of the public does not have enough information to make a decision over which firms they feel they can trust with their money.

Fund managers also need to be cognisant of the shift in demographics, though, in order to effectively target a new audience. This means tapping into the mindset of Generation Z and – more importantly – millennials.

While there are many myths perpetuated about millennials, it isn’t accurate to say that they are all too poor to think about their future. However, many people in this age group who are looking to invest are turning to robo-advisors rather than IFAs, so a different approach is required. Other millennials may be unaware of the benefits of wealth management, or simply believe that it is something other people do, but not them.

So building a brand that seeks to connect with this audience – and turn them into customers – must revolve around understanding the millennial approach to money, technology, and planning for the future.

A starting point would be to build a brand around de-mystification of fund management and becoming a trusted guide to people who may not even yet understand the potential benefits of investment. Utilising channels that millennials come into regular contact with, such as social media, asset managers need to show that they share the same values and speak in the same language as their potential customers. Using imaginative, eye-catching visualisations in order to communicate the more complex concepts is another way in which fund managers can capture the attention of millennials through these channels.

Of course, there are other ways in which asset managers can effectively market themselves directly to potential customers, but with budgets constrained it makes sense to focus efforts on the channels that best match up with the audience they are targeting. Showing that they understand the digital world and can be transparent about what they do should underpin these efforts.