Wreaks Speaks With...
Piers Currie, Group Head of Brand, Aberdeen Asset Management
INTRODUCTION Bill Wreaks, Chief Analyst of Gramercy Institute recently featured Piers Currie, Group Head of Brand at Aberdeen Asset Management as a keynote speaker at Gramercy Forum: London. Post forum, Wreaks posed five questions to Piers Currie on the current status of financial services marketing today. What follows are highlights of a most insightful Q&A.
ABOUT PIERS CURRIE Piers Currie joined Aberdeen Asset Management in 1995, then responsible for closed end fund marketing in the UK. Piers became group head of marketing in 2007 and then Group Head of Brand in 2012. In 2013 he was responsible for launching the refreshed Aberdeen brand globally through a global advertising campaign in 26 countries and 11 languages. Today the group is Europe’s largest independent listed fund manager, a FTSE-100 company with offices in 25 countries. Educated at Eton College and the University of Edinburgh, his early career was in advertising and journalism before specialising in financial communication for asset management. He is married with one daughter and lives in London, although travels to offices around the world. He is a director of the Queen Elizabeth II September 11 Garden in New York. He enjoys escaping to his Moorish town house in a medieval hilltop town in Spain.
WREAKS How well is the financial services industry trusted today in comparison to other times? What effect does this trust factor have on the way in which financial brands market themselves to their prospects and customers? (feel free to speak in global terms or in more local terms).
CURRIE Plus ça change. Scotland, home to the headquarters of Aberdeen, is no stranger to crises of trust in financial services, recently including two of its oldest banks, bailed out by taxpayers during the latest crisis. The Darien scheme, a bold Scottish plan to colonise Panama in the 17th century, backed by half the capital of the country, was an unmitigated disaster and to avoid financial ruin the country conceded to union with England. Meanwhile in the same period, Scottish economist John Law pioneered paper money for use in France to replace their shortage of coins in circulation for their near bankrupt state (too many wars). The ensuing paper speculation led to wild panic in Paris. Some of his concepts survive in monetary theory today, although Law is best remembered for the “Mississippi Bubble” that famously overvalued the then French colony Louisiana’s wealth.
Reasons behind the lack of trust in the industry seem as true and endemic today as a chapter I wrote 12 years ago, following another crisis, on reputational risk; “financial services have special characteristics that make them prone to crisis, reputation shock and regulation. Financial services are seen as different to other industries; the core differences being information asymmetry (sellers have more information than buyers); the weaknesses of the principal-agency relationship (separation of ownership and control); the “market for lemons” (fear of contamination of products) and the natural propensity to attract bad characters, because they tend to follow the money.”
The global financial crisis challenged many established household names to reinvent; many institutions that strongly messaged their size and stability, scope or heritage in better times were shown to have feet of clay. Many financial brands still struggle to find their expression of corporate differentiation or competitive advantage. The industry seems more comfortable in describing functions, the “what we do” and “how we do it”, over more progressive brand insights, such as culture, mission or vision. This risks commoditisation.
WREAKS Your experience at Aberdeen Asset Management spans many years. What is different about the way you market your brand, products and services than when you began at Aberdeen? Is this difference due to changes at Aberdeen over the years, or in the way that marketers market financial products?
CURRIE Maybe the big key difference is that 20 years ago fund marketing was focused on past performance and product promotion, now it is more brand orientated; investors look behind the veil and want to know who is managing their money and why.
Brand as a discipline was new to us until 2012, when our group arrived in the FTSE-100. Our management and board recognised the need to express our identity consistently, irrespective of the swings and roundabouts of market volatility and performance. That led us to refresh our brand and introduce a strapline, “simply asset management“ that anchors our focus, culture and purpose.
Marketing is not isolated from products and services in a jumpy world. The last 20 years has seen increasing asset volatility and discrediting of industry orthodoxies, whether it be the efficient market hypothesis, modern portfolio theory or the complex mathematical models that failed to match the real world. I touch on simplicity, transparency and behavioural economics in our small booklet on global themes as these resonate for us: Aberdeen's global themes booklet. We focus more now on what we do well and strive to be constant to that.
WREAKS Accurate measurement of marketing success and connecting this success to marketing expenditures is now a very precise science. How have developments in this area changed the way you and your team market your services? Is there still room for “gut instinct” in financial marketing?
CURRIE The “measurement currencies” around marketing, media and success to my mind remain awkward and short term. There are many variables determining outcomes that are outwith marketing’s control, including changing risk appetites and overall distribution effectiveness. The algorithms and digital reports show data can indeed be counted, but to paraphrase Einstein, not everything that counts can be counted.
Changing market mood and favourability can easily distort the best laid plans. Data from new media and digital can also overwhelm with noise rather offer than useful measurement; identifying the hidden gems in the stream of data can take a long-time. It took me nearly fifteen years to ignore quarterly fund flow data and move to rolling annual analysis as a better indicator of trends.
Behavioural finance is in its infancy, so understanding better how investors actually behave is still is being uncovered. Eventually that and the algorithms will chime but the investor journey is still quite crude. Meanwhile, we measure correlations, ratios of spend to flow, but the investment market is also capricious, favours blockbuster winners, rewarding the few (popular data reported that just 350 mutual funds out of 70,000 secure 100% of the net fund flows) and persistency levels get ever shorter. “Gut instinct”, even if used, is not how marketing reports, not least as finance directors would find that too irrational a process to release budgets. Certainly, marketing needs to be opportunistic at the tactical level, so open-mindedness to me feels better than gut.
WREAKS Internal marketing seems to be on the radar of many financial marketers today. Why is this so important? Will it always be?
CURRIE It is important because in a service industry, the face, personality and voice of the company is expressed through its people. Our products are invisible and the product in investment is a long-term promise to meet outcomes that are over the horizon; the investment journey is one with many bumps on the road. The people a firm attracts need to align with its vision, purpose and the culture of the organisation or else cracks will appear and risks emerge.
So recruitment, development and retention become ever vital for clients and investors to feel their experiences match their expectations. HR welcomes good marketing as it makes their role easier, for recruitment, performance measurement and aligning the cultural competences to reward. Likewise, bigger firms with dispersed offices around the world need to make sure that the tone from the top, strategy and shared beliefs are working well and that requires behavioural reinforcement at all levels of the organisation. If culture beats strategy every time, it means culture has to be nurtured and protected.
Digital and social mechanisms mean once silos of responsibility and information are now increasingly porous. Firms can no longer hide from the outside, nor can they shield themselves internally from challenge, which needs to be encouraged and welcomed if organisations can be fresh, nimble and adaptable to change. Everyone is an ambassador for their firm as the world has shrunk and information is publicised everywhere. We are all self-publishers, knowingly or not and who we work with or for is inherent.
WREAKS If we could look into the future (right now) and see the financial marketing industry ten years from now—would we be surprised to see how things get done? What do you see up ahead in the future of our industry? What changes do we have to look forward to? What should we be worried about?
CURRIE I attended an annual state of the industry conference two months ago and was impressed by the keynote speaker who was retiring; he gave his forecasts of the future of the financial services industry. Some of his crystal ball was quite dark.
He foresaw the demise of mutuality for many life companies as inevitable as institutions seek to devolve risk or pass it on, whether for corporate pensions, governments or insurers and banks all are driving the industry in one direction and look to remove risk from their balance sheets or liabilities.
Traditional life and pensions companies are becoming asset managers as defined benefit schemes get replaced by DC, as technology personalises risk profiling and banks with capital adequacy calls need to shore up their balance sheets and tackle risk and returns in different ways.
Demographics are accelerating product change as baby boomers age, their investment needs become outcome-focused rather than benchmark relative performance. The speaker thought the greatest asset class in ten years in the UK might be equity release from peoples’ homes, maybe from a new bond business, to square the circle of intergenerational wealth transfer.
In the UK, the pensions allowance and tax breaks are reducing, meaning savers and investors will use less tax efficient assets to cover, where they can, the demands of healthcare and end of life planning.
I can see behavioural finance become more mainstream and merging more seamlessly with digital to allow investors to map and plan their investments in way that is more frictionless and indeed more playful, as the experience of investing needs to be overall more fun, even if it is serious. We will need a better word than “Solutions” to describe outcome-oriented investing.
Asset allocation may in future include more interesting and different asset types; the crash showed that too many, even when saying they weren’t, ended up being correlated. So this may lead to more innovation in “real assets”, a growth in illiquid but possibly stable income flows, from for example infrastructure.
Piers Currie, Group Head of Brand, Aberdeen Asset Management
Bill Wreaks, CEO & Chief Analyst, Gramercy Institute