A well-established brand can foster confidence and credibility with potential investors. In the private wealth sector, where individuals are investing their personal assets, trust is paramount.
Managers who have only had dealings with institutional allocators, with their deep capital reserves and sophisticated asset allocation programmes, have not needed to pay too much attention to brand. Of course, reputation and performance are vital but in the private wealth space, brand takes on more importance because, typically, the GP’s name is unlikely to be known; unless they happen to be Blackstone or Apollo.
As such, GPs have to think carefully about who and what their firm stands for. This requires putting sufficient resources in to the sales and marketing team to articulate their brand. What are they known for in the institutional marketplace, and how can this be transferred to benefit a wealth manager? What does their track record say about the firm? What’s unique about their investment style? What resources are they putting on the ground in different geographies to build their brand?
As one prominent fund manager noted on background: “All in all, if you don't have 10 to 15 people working on brand marketing and client services, good luck.”
Key elements to building a brand
In a B2B2C environment, the GP has to consider two clients: the advisor (gatekeeper) and the end investor.
Even if you have the best brand in the world, if the gatekeeper isn’t convinced then it’s going to be an uphill challenge to build traction. Erwan Paugam is Head of Private Wealth Solutions and Senior Managing Director at Ardian, a world leading private investment house.
For the last four funds that Ardian closed, private wealth represented more than 20% of assets raised.
Paugam explains that the credibility you build with the advisor is twofold: Firstly, how much marketing support do you offer? "How many people you can deploy with those advisors to help them with their business? And secondly, performance. Can you convince an advisor your fund will be successful and is going to deliver the right performance for them to direct clients’ money into the fund?” he says.
There are various elements to brand building that a GP may want to consider. These include the following:
The Benefits of a Strong Brand
Relationship building is vital to building a strong brand. The more private banks and asset/wealth managers know the firm, the more it becomes a virtuous circle. Relationship and brand building are closely intertwined. The more distribution partners a GP can point to when looking to expand into Asia, for example, which is home to approximately 15 million HNWIs, the more they will be able to validate their business.
It helps if the manager in question already operates in public markets. Global asset managers have the internal operations and expertise of managing open-ended vehicles across traditional asset classes. This has allowed them to build their brand over years, if not decades…one only has to look at the likes of Franklin Templeton, Fidelity, Neuberger Berman, to appreciate the size of the businesses they’ve built, overseeing hundreds of billions in AUM.
Speaking on the panel “How Fund Managers Are Adapting To Seize The Wealth Opportunity”, Jose Luis Gonzalez Pastor, Managing Director, Neuberger Berman said that having worked with distribution partners on the public markets side for many years “they know us well. We’ve been doing this for 35 years so it’s very synergistic. We know what they need and we try to give them the best experience and the most innovative products.
“We already have a lot of the tools needed to run an evergreen fund; we have a local presence in a lot of countries. Our salesforce was already trained for private markets.”
Building that level trust with distribution partners is paramount. A top private bank like DBS or OCBC in Singapore is going to pay more attention to one’s brand if they are presented with a well polished website, strong content (including case studies), testimonials from other banks etc. This will help the GP become better recognised, accepted and understood.
Wealth advisors need to be carefully nurtured over time, so that they are able to build a clear picture of who the GP is, what they do, how they do it, and what their origin story and history is. The wealth advisor has to be convinced because their relationship is on the line with every solution presented to clients.
“If you are the one educating and helping the advisor understand and grasp what you do, what private markets do, they'll think of you before they think of the other funds that they have on the platform,” comments Paugam. “When I travel into a different region, I always go through the list of the wealth managers that we work with to organise a meeting so I can spend time with their advisors telling them what we do. Because the advisors needs to be convinced. That's how you scale.”
Picking up on this point about scale, Veronique Fournier, Head of EMEA Wealth Distribution, Apollo, speaking on the panel “What Wealth Clients Really Want: Surprising Lessons Learned From The Field”commented: “We are seeing demand grow for evergreens that are going to sit on banks’ shelves for a number of years and there will be a requirement to service them. We launched a direct lending strategy and today it is a $12 billion fund, getting over $500 million in subscriptions per month. That puts a lot of requirements on your origination engine. That is where scale will become important.”
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Many private equity firms have invested in producing high-quality content to showcase their expertise and attract wealthy individuals.
For instance:
Firms have also enhanced their digital platforms to cater to tech-savvy wealthy individuals.
For instance:
A well curated website is the shop window into which any new advisors will be introduced to the firm’s brand. It was remarked during IPEM Cannes Wealth that in the US alone, there are some 14,000 PE firms - more than there are McDonald’s restaurants. That’s an overwhelming choice for wealth advisors.
Leading firms such as Ares, Apollo, KKR, are prestigious names in the institutional world. But may not be as well known across private wealth.
“Few know we are NYSE-listed with a $60 billion market cap. Gatekeepers and CIOs know us very well but as we enter the broader European retail market, we are going to work on our brand. One trick up our sleeve is having local offices across the continent. The more we can bring local deal expertise and local language to build trust in those countries, that will really help us,” explained Mark Serocold, Head of EMEA Wealth Management Solutions, Ares Management.
Some firms have launched educational programmes to familiarise wealthy individuals with private equity.
For instance:
iii) Exclusive Events and Networking Opportunities
Some firms have organised exclusive events to engage with HNW individuals.
For instance:
Build Desire…Like Luxury Consumer Brands
Recently, Air France ran a successful campaign announcing their new La Premiere first class cabin. It was a big splash, even though there are only four seats on a handful of their aircraft!
Still, as with any effective advertising campaign, subconsciously it played a huge role in making the airline’s economy class, business class and premium economy class more prestigious.
GPs who win the trust of distribution partners have the potential to further burnish their brands if the solutions they offer meet expectations.
At Ardian, this has materialised through its partnership with Standard Chartered Bank.
SCB wanted to communicate the virtues of this successful partnership. This communication exercise ended up being well received and picked up by a lot of media publications.
“We received incoming calls from many existing partners, and also numerous prospects. Intellectually at least, the SCB communication worked exactly as planned. It created a buzz. This is more powerful than all the press coverage because if people start positioning Ardian as being a high-end firm, it will help with our evergreen funds, it will help with our closed-ended funds, it will help with all of the solutions that we offer,” stresses Paugam.
He wants Ardian to be viewed as a luxury brand.
“We're not changing who we are,” he continues. "Ultimately, the only thing that's important is what clients want. If you build a product, even if it's not accessible to everybody, it needs to be desirable. We want to be considered as a luxury brand for private assets. Like the airline analogy, you can do luxury and still be relevant for everybody.”
In short…learn to crawl before you walk
Building a brand presence in global private wealth takes time and patience.
One cannot trade on past glories and expect their institutional reputation to instantly translate into the rarified, highly discerning world of private wealth. Provided the GP commits time, energy, and a creative mindset to build their brand equity, success will likely follow.
Shane Clifford, Head of Global Wealth at Carlyle summed it nicely with the following remarks at IPEM Cannes Wealth:
“Ultimately, we all have a lot of pride in our firms’ brands and if you trip up in the wealth space it has a ripple effect. I would urge some caution. If you’re new to this space find one partner, do something in a drawdown structure for the QP market. The evergreen market is here to stay and it’s growing rapidly. We would offer our drawdown vehicle on a platform, raise capital and then we would follow up and bring our evergreen fund to that platform; or vice-versa. That’s a great model because it allows you to always be on the platform, telling your brand story at all times in the market.”