Mutual funds prepare confidence-building ads

The message is safety and security as investors quiver

Oct 5, 2008 @ 12:01 am

By Sue Asci

In the wake of plunging investor confidence, mutual fund firms have developed advertising messages that stress solidity.

"There is so much speculation in the market that we wanted to have something to get front and center of our clients," said Rob Romano, vice president of brand management at TIAA-CREF of New York, which has introduced two ads. "It's another way to reach people and let them know that there is safety and security here."

The print ads, with themes of survival and volatility, cite the firm's long-term-investing approach, low fees, high ratings and stability. The first asks, "Since when did survival become the bar?" The ads will run for an undisclosed period of time.

TIAA-CREF is not alone. T. Rowe Price Group Inc. of Baltimore and The Charles Schwab Corp. of San Francisco also have introduced ads in response to the economic crisis. Some firms, such as New York-based OppenheimerFunds Inc., chose instead to modify their fall advertising strategy in response to market conditions.


"I think when people have a lot of questions and the firms are raising the flag and sticking their head out of the foxhole, that is seen as a positive thing," said Burt Greenwald, a Philadelphia-based mutual fund consultant.

T. Rowe Price's ad ran in several newspapers, leading with, "Ultimately, there's one thing that will see our investors through these unsettling times — confidence."

"The ad that we developed was really in response to all of the turmoil going on in the financial markets," said T. Rowe Price spokesman Brian Lewbart. "Given that many are referring to this as a crisis of confidence on the part of investors, we thought it made sense to get out with a message that for T. Rowe Price, confidence is a prominent characteristic of who we are as a firm."

The ad ran several days.

"We're evaluating the ad, based on everything that's going on in the market, whether to continue to run it or run it in other locations," Mr. Lewbart said.

OppenheimerFunds had already scheduled the launch of a multimedia ad campaign for Sept. 22. The "Numbers" campaign includes three ads focused on different themes, including long-term investing, asset allocation and retirement. The firm reversed the sequence of the ads because of the crisis.

"Instead of launching with all three ads together on the same day, we decided to focus on the long-term-investing piece," said Bruce Dunbar, senior vice president and director of corporate communications at OppenheimerFunds.

Research for the campaign began a year ago, and the firm had already identified trust as a major issue of concern among investors. It also found that there is a significant amount of money in motion as a result of the market turmoil, Mr. Dunbar said.

In addition, Schwab launched a one-time full-page ad Sept. 24.

"This ad is different in that it responds directly to a very unique time and set of circumstances," said Matt Hurwitz, a Schwab spokesman. "This was an open letter to America's investors, speaking directly to them about what is happening, while providing our point of view and recommendations."

The messaging will continue through the firm's multimedia "Talk to Chuck" campaign in the coming months, Mr. Hurwitz said.

If the trend continues, it may mean bigger advertising outlays by fund companies for the remainder of the year. Ad spending by mutual funds was up only 3% through June to $141.7 million, according to Nielsen Monitor-Plus, a division of The Nielsen Co. of New York. Last year through June, spending totaled $137.4 million.

Some believe that the ads underscoring financial strength and security will continue.

"Ad spending is going up now for big-picture messaging," said Dan Sondhelm, a vice president and partner at SunStar, a financial marketing firm based in Alexandria, Va. "I think that's going to continue until things really recover. I don't know that that will change until the market starts going in the other direction consistently. Right now, there's a lot of money in motion. Fund companies are fighting to keep what they have."

It's easy but expensive to advertise in print, Mr. Sondhelm said. "But if investors see that they are not hiding, they might stick around and not move on to the next fund," he said.

Others said many firms won't be able to advertise in a big way, because they don't have the money.

"I think you are apt to see more of this, but maybe not an overabundance of it, because everybody has budget constraints right now," Mr. Greenwald said.

"I don't think they'll spend a lot more on these types of ads," said Geoff Bobroff, an East Greenwich, R.I.-based mutual fund consultant. "If the economic problems continue, even after the bailout, the answer is that we are likely going to enter a severe recession."

An increase in 2009 is unlikely, Mr. Bobroff said.

"Budgets are being cut," he said. "Conferences are poorly attended. Nobody has money to spend. I think the ad pages are going to decline next year for the most part."

Yet while the financial services industry spent 1% less on advertising during the first six months of this year, compared with the comparable period in 2007, the dip is still less than the decline in ad spending overall, which meanwhile fell 1.4%, Nielsen reported.

E-mail Sue Asci at


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