It's registered retirement savings plan season but don't expect to see TV hits featuring a golf-club swinging Spider-Man or a star fund manager promising meteoric returns.
The central sales message from mutual fund companies this year is earnest, sincere and, well, kind of dull. There will be fewer ads to see this month and next and most will tout the dreary virtues of financial planning and expert advice.
"It's not about selling product, it's about understanding the goals of the customer and a holistic approach," said Rick White, vice-president of brand and marketing management at Bank of Nova Scotia.
"Find the money," the bank's mutual fund campaign theme this year, emphasizes disciplined saving and prudent borrowing. About a decade ago, the bank's "reality check" ads struck fear into investors' hearts with the warning that you must sock away $1-million to retire comfortably.
"We are being very realistic about what you need," Mr. White said. "It's a boring way to invest but we feel it's a good way."
So why has the message changed?
First and foremost, the dynamics of the investment climate and, by extension, the fund industry, have changed dramatically. The market's downturn in 2000 and 2001 spooked investors and mutual fund sales growth took a nosedive. From 1997 to 2000, fund assets under management swelled 48 per cent to $418.9-billion. In the following four-year period, assets rose a slender 13 per cent to $482.4-billion today.
The industry has consolidated, margins have been squeezed and discretionary advertising budgets cut. Meanwhile, the sales cycles has shifted too, from selling a product to the consumer to more sophisticated targeting of the financial consultant, broker and planner. National radio and TV ad buys have been replaced by print campaigns in trade publications.
The multimedia ad spending of five years ago has been replaced by "disciplined and tactical" campaigns aimed at building brand preference, said Doug Checkeris, managing partner of Toronto's Media Company.
Historical ad spending is the most telling statistic. According to Nielsen Media Research, Canada's mutual fund industry spent $67.3-million on advertising in 2000. That figure plunged dramatically to $13.5-million last year. Ad spending may shrink further.
"We are spending less money, I know that for sure," said David Feather, president of Mackenzie Financial Services Inc. of Toronto. This year, Mackenzie's low-key RRSP campaign will focus on the merits of long-term investing and active management.
The current campaign of Toronto's AIM Funds Management Inc. reflects the sombre tone. AIM Trimark billboards in urban centres feature a gray-haired executive and the tag line "Visionary? Puppet? Knowing pays." Seven years ago, Trimark's slick TV ads had an animal theme: briefcase-toting executives wearing sheep heads and jockeys jumping from one horse to another.
Investors Group Inc. may be feeling a little smug. The conservative Winnipeg-based company has been plugging the boring merits of sound advice, financial planning and long-term investing for years. The company's national TV ad campaign this year features cornball shots of lovers on a train platform, a tire swing and a child jumping in a lake.
"Our approach has been very consistent," said Neil Taylor, vice-president of marketing. "The formula has always worked well for us. Clients out there are looking for advice, they are looking for help, they are looking for individuals who they can trust."
Fidelity Investments Canada Ltd.'s plans to cut fees on its family of mutual funds appear to be long overdue.
Management expense ratios -- the annual fee unit holders pay -- remained virtually unchanged in 2003 from the previous year, reports Investment Executive. The overall rate investors paid for their funds was 1.94 per cent.
Research by the industry journal suggests the rate was flat because of lower-priced fixed-income funds grabbing a larger share of the market -- 14 per cent in 2003 from 12.1 per cent in 2002 -- while higher-cost international funds fell, to 23.4 per cent from 27.9 per cent in 2002.
In January, Fidelity unit holders will see the MER they pay each year drop by 20 to 30 basis points. (A basis point is 1/100th of a percentage point.) The competitive move will cost the company about $25-million.
Saxon Funds Management Ltd., a little-known Toronto fund company that's on an impressive growth curve, is expanding its product line again.
Pending regulatory approval, the Saxon U.S. Equity Fund and Saxon International Equity Fund will join the firm's roster of funds this month. The two new funds will bring Saxon's fund count to nine following the successful September launch of the Saxon Bond Fund and Saxon Money Market Fund.
Strong returns, lower-than-average fees and a flexible sales model have helped Saxon gobble up increasing market share. As of Nov. 30, the company had $1.1-billion in assets under management, up 103 per cent from $549.8-million a year earlier. It's yet another boutique firm finding some demand for its wares, a list that includes Calgary's Mawer Investment Management Ltd. and Acuity Funds Ltd. and Northwest Mutual Funds Inc., both of Toronto.
© 2007 The Globe and Mail. All rights reserved.
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