The Growth Engine - Series 2 Episode 8: Making Investment Trusts Visible to Retail Investors | Roland Spencer

Speaker A: What is my fund or my product doing for that person's life? The typical investment trust holder looks very much the same today as they did 10 years ago. It's older white men southeast of England with quite significant portfolios who are confident investment decision makers. That's still the case. The struggle with investment platforms is their scale businesses. Ten years ago the majority of the customers would have been more sophisticated, more confident people who want investment ideas and they are quite active investors. The larger community that you can develop around a platform, I think that that's the opportunity. There is a narrow gap for that. If they unlock a new generation of investors, if they're able to get a first time investment trust holder, that legacy platform would not have reached.

Speaker B: Yeah.

Speaker A: Then that's a fantastic thing.

Speaker B: Yeah. Welcome to the growth engine. Today. I'm delighted to be joined by Roland Spencer. Roland, thank you so much for joining us today.

Speaker A: Thank you.

Speaker B: Barcelona Internet Cafe. To becoming an investment trust board member. That sounds like quite a journey.

Speaker A: It was, it was. I'll give you the very brief potted version.

Speaker B: Brilliant.

Speaker A: I went to Barcelona in 2002 having graduated in the uh, in 2000 with a degree in politics and didn't know what I wanted to do with my life and thought young man, time for some adventure, time for some fun. But then the reality of having to work for a living got in the way and I was fortunate enough to find in Barcelona a job with an online startup that were producing quite revolutionary publications for UK based IFAs.

Speaker B: Okay.

Speaker A: And that kicked me off in the, in the financial services.

Speaker B: You hadn't previously had any work in financial services?

Speaker A: Not at that point. But then that led on um, from there to working in Europe, European pensions and investments market with institutions um, and asset managers on a pan European basis.

Speaker B: Right.

Speaker A: Moving back to the uk um, worked with a firm who were in the hedge fund market.

Speaker B: Okay.

Speaker A: And got to travel the world meeting the, the hedge fund community which was lots of fun. Yeah. But that led to the financial bubble um, in 2008, at which point I moved into retail with uh, Shares magazine who were then subsequently taken over by AJ Bell, the uh, very successful investment platform whom um, I left in December and now find myself as an investment trust. Ned. And I'm very happy to be there.

Speaker B: Yeah. Fantastic. And there's that thread I guess that's always been around bringing investors and investment products together that's quite unique in the space. Did you realize at the time when you were navigating your way through that journey?

Speaker A: It's something I realized more in hindsight at the time I was following my interests and I wouldn't realize the, um, the kind of, the continuity, the thread that brought it all together and. But I had a strong feeling that kind of retail and retail investors, that's where I wanted to head to.

Speaker B: Right.

Speaker A: Hedge funds was kind of exciting and sexy at the time and. But I didn't really feel a personal relationship with it. The retail market. That's where I wanted to be. And it was only really in hindsight that you could see the kind of. The continuity with all those different roles. Yeah.

Speaker B: Did you go because you went from institutional into retail? Was there stuff that you could take into that space and sort of reflect on to make you better or more. More thoughtful of how you approached retail marketing?

Speaker A: I think very, very different. Very, very different. Um, and the, I think the key differences around the retail is more emotional and that's, that's something I might bring up later. Yeah. And what you're doing for retail, for them individually matters so much more than perhaps it does for institutional. You have professionals who have maybe more of an analytical or, um, a framework within which they operate. And whereas retail is messy, it's exciting, it's difficult. So it's really. I think the lessons can go the other way. It's probably more the institutional can learn from retail.

Speaker B: Right.

Speaker A: And I think that that's a far more challenging market to operate in.

Speaker B: Yeah. How interesting. Let's go back, um, to what you mentioned about A.J. bell acquiring Shares magazine, um, 20 2012. Is that right?

Speaker A: That's right, yeah.

Speaker B: Um, and then previously spoken, you said, you said there was almost a period when not a lot happened, about four years and then suddenly everything happened.

Speaker A: Yeah.

Speaker B: Well, talk us about that time and what was it that created that inflection point?

Speaker A: The story is, um, we, we at Shares magazine, we had a publication, physical magazine that you could go and buy in the shops. And we also had a business where we sold data and content to third parties. And the story is Andy Bell was approached to see if he wanted to buy content, and he said, why don't I buy the company instead? And so it became internalized into the business. But I think at that stage the priorities were developing the investment platform and um, the functionality, the app, what you see and use today. Um, and the integrations of the media business did take those four years. And the big change was going from a magazine on the shop, uh, in the shops, to really a customer magazine for customers of AJ Bell and added value to that platform proposition. A differentiator for AJ Bell. Customers. So we stopped printing the magazine and we became a digital only publication which at the time 10 years ago was scary at the time. Media and publishing has been difficult for a very long time. The costs are very high, sales are difficult. Um and it was sometimes a last resort for a publication that couldn't make the print business work.

Speaker B: Right. Yeah.

Speaker A: But we were choosing to do this to make it better rather than being a defensive move. It was something to make or allow us to reach a larger audience and to be in a format that was more useful to more people.

Speaker B: Yeah. A strategic decision.

Speaker A: Strategic decision. But it was still really scary. You didn't know how it was going to be received, whether um, it would be successful and that kind of change and transformation. There was a lot of other commercial considerations. I said we sold data and content to other providers. We had to change our model very significantly.

Speaker B: Yeah.

Speaker A: Um, and part of that change was then establishing relationships with particularly investment trust, uh groups, asset managers, ETF issuers and the wider funds world. Um, which we hadn't particularly been doing before.

Speaker B: So. And what was the reason for those that in order to generate revenue to replace the. Presumably the print.

Speaker A: In part ash coming in part. Exactly. So Shares magazine started in 1999 and it was really a bit of a tip sheet. So smaller companies focused. It was quite. Trading for people who kind of getting, getting in and out of uh, equities quite quickly.

Speaker B: Yeah.

Speaker A: And over the years it evolved particularly under the editorship of Russ Mold who's uh, still with A.J. brown, a very prominent figure to being more educational, more focused on longer term investing and, but still had a mix of equities, some trading, some funds and then we looked at the needs of the AJ Bell customer, what was going to be more useful for them. Um and so then that change again in the content style to better match what they were and what would be useful to those customers. On the commercial side as a print magazine, our advertisers were the other platforms.

Speaker B: Okay.

Speaker A: It might have been Interactive Investor uh Hargreaves lands on. And you can't really have those guys advertising in the customer magazine for a job. Of course there was. We had to close a lot of relationships finish. A lot of relationships have been very hard fought for and developed over a really long time. That was quite difficult of course. Um, and then build a whole new relationship group with uh, particularly the investment trust market.

Speaker B: So what was your specific role at that point in time? So once you we've just gone digital you've got, you've said goodbye to some customers. Advertisers of the share platform. What was your role then and uh, what was you sort of tasked to do, so to speak?

Speaker A: Yeah, so there was a lot of admin work, closing things down and the kind of the management of that. And there's also then data suppliers and websites. There's quite a lot of other things on the go on the commercial side. It was then starting to develop those relationships and investment trust with investment trust.

Speaker B: Start advertising in the.

Speaker A: Start advertising in the digital magazine. Okay. So this was the first time there was a pitch to an investment trust. You can advertise in a publication that is read by platform customers.

Speaker B: Got it.

Speaker A: And there were some who got that straight away. And there's been a guest on the podcast before, uh, Simon Longfellow, really very good marketer. Yeah, very good master. But he, he, I would say got it first.

Speaker B: Right.

Speaker A: And embraced it.

Speaker B: Right.

Speaker A: I think it was he the first

Speaker B: customer or one of the first.

Speaker A: He was m. The first, I'd say the first substantial. Significant.

Speaker B: Yeah, yeah.

Speaker A: You could see the potential.

Speaker B: Yeah.

Speaker A: Who I think with his platform background understood the value proposition very, very quickly.

Speaker B: Yeah.

Speaker A: And the confidence that then gave the rest of the market that Janus Henderson or Henderson as was, I think.

Speaker B: Yeah.

Speaker A: Were committed to it really helped then to build relationships with um, the other groups. And so over the years it developed from being the larger investment managers to really the whole market, you know, all the way through the boutiques and the individual, the self managed trust as well.

Speaker B: So what, what could they buy? What almost. What were the products, shall we say, what you were offering in simple terms

Speaker A: in the magazine, in the digital magazine, they could buy advertising, display ads and sponsored content.

Speaker B: Yeah.

Speaker A: So articles that they wrote that we would put into the magazine.

Speaker B: It kind of got to the point, I remember where you could almost pick and choose your. You almost had too many customers, didn't you? To. To choose from.

Speaker A: We were very successful in a fantastic position. And that, that wasn't just our doing. It was a change in the investment trust market that recognized the value of the audience. We had the magazine. We also ran lots of events and on some of these things there were limited opportunities. There are only so many speaking slots at conferences. There are only so many pages in a magazine.

Speaker B: Yeah.

Speaker A: You need to have a level of balance. So we tried very hard not to be perceived to be favoring any particular group or promoting any fund over another fund. And we very even handed.

Speaker B: Yeah.

Speaker A: Um, and that meant sometimes having to say no, you've kind of had your fair share. I think most of the marketing managers, the buyers, if you like. They understood that.

Speaker B: Yeah.

Speaker A: And that was also how we treated them. In turn, we made sure there was opportunity for the right people at the right time.

Speaker B: I think at the peak of the. You're only about 25, 30 events and webinars a year. That's quite a substantial program for people to get on, gone and board with. And I'm presuming, presumably that gave Investment Trust direct access to AJ Bell investors, which is enormously valuable.

Speaker A: That's right. So we would. For the events, if you were a holder, you'd be notified that the fund was presenting.

Speaker B: Right.

Speaker A: And there were also people who we would invite to events or webinars who were actively. That told us they were actually looking for new investment ideas. So they were. Those typically sophisticated engaged retail investors and existing holders would be your audience. And so for an investment trust manager, fantastic opportunity to connect with those individuals. And they know everybody in the audience. Everybody on the call is either an existing or potential holder.

Speaker B: Yeah.

Speaker A: And they have the means and the platform and the way that they are able to invest.

Speaker B: Yeah. At that point, at uh, the kind of peak popularity, shall we say. And, um, I'm, um, being, you know, broad brushstrokes here, but at that particular point where any other platforms doing that

Speaker A: as well, no proposition was unique at the point of that switch from print to digital. Interactive Investor used to have their own print magazines and they used to have a digital marketing offer. Um, but that went a long, long time ago, predating all of this that I've described.

Speaker B: Yeah.

Speaker A: And no other platform has approached it. I think again, Interactive Investor now do have a community, they do have an app and they do try and bring people together, but, um, not in the same way that we had, um, with AJ Bomb.

Speaker B: So during that time, I think you had a pretty unique position within the market because you had essentially a proposition which is the only one available, but you had investment trusts and other products. Investment products coming to invest directly to the retail audience. What. What did you learn from that period about what. What works within marketing to. To things which maybe don't. Are there any, you know, nuggets that you can share with the audience?

Speaker A: I think in terms of what works. It's such a difficult question to answer. I think what works for you might not work for. For someone else.

Speaker B: Yeah.

Speaker A: Context, um, is performance. There's so many different reasons, um, why that might be the case. But I think that the truisms are around continuity being visible or marketing, call it what you like, over a sustained Period. Yeah, it's not a campaign you can. Or something you can turn on and off.

Speaker B: Yeah.

Speaker A: It's not something you can um, commit to half heartedly if you want to be successful.

Speaker B: Yeah.

Speaker A: The most successful um, whether it be investment trust or any other financial products are the ones that you see today, you see in five years time, 10 years time. And they build and build and build and build through those good times and bad. And I think that out of anything be that the one truism m. Otherwise it's execution and tactics which change as market conditions change, as media change.

Speaker B: So it's what we're essentially talking about there is that it's ongoing long term brand building.

Speaker A: It's being in it for the long term. Absolutely.

Speaker B: Yeah.

Speaker A: Yeah.

Speaker B: There's a, there's a big marketing paper called the Long and the Short of It which is Lesbian and Peterfield. But they talk about short term as well as long term brand growth. So short, short term sales activations campaigns to you know, to get the spikes of sales activity going. But that could, if it's dealt with long term brand building, that's the way to grow brands and businesses. It's comforting that you saw that within uh, within your, within your area uh, of looking out across the whole market. So again I think you're in that incredibly unique position. So it's um, it's. Yeah, it's good to hear that.

Speaker A: And it was, it was, it was a privilege to be able to see all the different sides of it. To be able to have relationships with, with investors.

Speaker B: Yeah.

Speaker A: Have relationships with the, with the product issuers and be able to see the data. We couldn't share the data but I could see it um. And it was a fantastic, fantastic period.

Speaker B: That, that, that's changed now, hasn't it? And it's um, obviously the, the, the, the business has taken a different strategic direction. Um. What, what's the, what's the reasoning behind that? Because I know that it's from a, from, from marketers point of view. It's, it's, it's. There's, there's. That that opportunity is now no longer there as the market. Is there anything your, your views on that?

Speaker A: I think is, I think it's a real shame.

Speaker B: Yeah.

Speaker A: Uh, personally. Both personally and professionally personally. But I think that it was enjoyed by readers, by event attendees, by what, you know, the people who engaged on the investor side. I think we offered them something, a service that they enjoyed and they took value from. I think the struggle with investment platforms is their scale businesses.

Speaker B: Yeah.

Speaker A: And they're trying to service A.J. bell's case. I think it's three quarters of a million now. You know, the, the numbers that the larger platforms have are, are vast.

Speaker B: Yeah. And it's a different type of business back then.

Speaker A: It's a different sort of business back then. Exactly.

Speaker B: Yeah.

Speaker A: And the customer profile evolves when 10 years ago the majority of the customers would have been more sophisticated, more confident people who want investment ideas. Um, and they are quite active investors and they're still there.

Speaker B: Of course. Yeah.

Speaker A: However, many of the newer customers, there's hundreds of thousands have come on in the last few years. Millions have started investing in the last

Speaker B: few years, which is a good thing.

Speaker A: It's fantastic. But their needs, what they want is, could be quite different.

Speaker B: Yeah.

Speaker A: And the content they want and how they consume it changes. And I think it's difficult servicing different pockets of customers.

Speaker B: Yeah.

Speaker A: At different, in different places at different times. I would like to think that it's doable, but there we are.

Speaker B: There's a gap. And it kind of goes back to the point you made at the beginning that marketing to retail is hard, it is messy because you've got. There isn't one size investor, uh, there's not one marketing strategy that you can just cut and paste and it will work for another one. It's, it's complex, it's complicated and it's. Yeah, unfortunately there's this route in. But I understand why the platforms are. You know, AJ Bell has taken a different route, but is there is a gap there, isn't there, that I don't know who's going to fill that. But presumably someone will at some point because there's a, there is a market need there.

Speaker A: Uh, I think so. And I think when it comes from a platform, you've got integrity and you've got trust and you already have a relationship with those people.

Speaker B: Yeah.

Speaker A: There are a number of websites where you can, as an investment trust, you could advertise or you can use to promote yourself. Other events, organizations, and some are more focused on, again, smaller companies, some might be more focused on longer term investing, but the larger community that you can develop around a platform, I think that that's the opportunity, but there is a narrow gap for that.

Speaker B: I am interested obviously, from the, from an investor's point of view about what they got out of the relationship of having access to them. I think that's a very important point. But the marketer in me is intrigued about the knowledge that you saw with your eyes because you had access to volumes of data Both from marketing impact, but to invest the types as well. And I just wonder what, what you learn or you could tell about typical types of investors or I know that there's ways of thinking about, when you look across the market, typical holdings that's in within investment portfolios and your views on core holdings versus standard holdings. What can you tell me about that?

Speaker A: Platforms now are mass market, which makes this quite difficult question to answer. Um, and there are groups, there are segments within or Personas, however you want to kind of categorize within those overall, um, platform customer sets. And there's contradictions within it as well. M and it's quite difficult when trying to create those Personas or those pictures. They can sometimes not tell the whole story though. Absolutely. In my opinion, in my experience and the data that I've seen does suggest that, that the typical investment trust holder looks very much the same today as they did 10 years ago. Okay, 20 years ago. It's older white men southeast of England with quite significant portfolios who are confident investment decision makers. That's still the case. But it's not just that. Um, you'll then have groups of people in their 40s and their 50s who are building their wealth, are accumulating, who are also investing in investment trusts. You then also have some younger people, maybe in their 30s who have also bought an investment trust, not necessarily because they think I want to buy an investment trust, but because they want space, because they want the theme or the investment portfolio that that product allows them to access. Um, and so when you look at the typical holding sizes, it depends. Are you looking at group A, B or C in those. But if we're looking at the first group, the classic investment trust investor, and their individual holdings, I'd often see an average holding per line. So per fund, 15,000. 10 to 15. Nearer 15 would be a typical holding. And you might have eight of them, 10 of them. You then might have core holdings which might be 20, 25,000 in value.

Speaker B: Yeah.

Speaker A: And you might have a very small number of those. And there are certain products that naturally fit into those different lend themselves to that.

Speaker B: Yeah.

Speaker A: And then for those same people, you might have some satellites, some more speculative investments, five or 6,000m for the younger investor, five or 6,000 for them. That's their core. That, that might be the majority of their money.

Speaker B: Yeah.

Speaker A: Um, and the, the values therefore decrease as you attract or the averages decrease as you attract more investors. So when you consider your share register, if you're able to get access to the data, which is very, very Difficult. If you are told or if you can see that you have a lower average holding size, that's a positive. That can indicate that you have more younger investors. People are building stakes in your company. Um, on the register, if you have a very large average, it could show that the holders have been with you for a very long time, accumulated a large stake but might not have a replacement rate. And so that's the story at AJ Bell and probably hargreaves Interactive Investor. The profile of customers is quite similar across those big three platforms.

Speaker B: Okay.

Speaker A: I think the Interact with investor average customers now the most valuable on mean average. And AJ Bell and Hargrave is very very similar.

Speaker B: Just to pick that up that the average investment holding on uh, Interact Investor is higher than.

Speaker A: Yeah, I believe so.

Speaker B: Okay.

Speaker A: I believe so. And the data that I've seen. But we don't see the hargreaves numbers anymore since they've gone private.

Speaker B: Of course.

Speaker A: But I think the interactive investor flat fee model has attracted a significant number of higher value investors that has increased their average portfolio size. But with regards to their investment trust holdings, I would imagine the profiles are pretty similar across all three platforms. On the newer platforms and that could be trading two 1, 2 free trade and that wider group, the numbers of customers they're attracting is very very significant. I believe trading 212 are now the largest platform by number of individual customers.

Speaker B: Really?

Speaker A: I don't know how active they are.

Speaker B: Yeah.

Speaker A: Or their value and their values anecdotally are significantly lower. So their holdings might be low thousands, several hundreds um, as they start their investment journey. Their investing journey.

Speaker B: Yeah. Ah. All those platforms more tradied than. Than long term in your perspective.

Speaker A: I think they may have set out to be that way.

Speaker B: Yeah.

Speaker A: And many of their customers would be. They might also offer access to cryptos for example like eToro or CFDS or other uh, more trading oriented products.

Speaker B: Yeah.

Speaker A: I think price savvy investors are also very much attracted by the proposition. Now they've built out their full account offerings so uh, not just ISIS and dealing accounts but pensions, SIPs.

Speaker B: Yeah.

Speaker A: And they've widened their investment universe. A lot of these guys started with maybe only equities or US equities in uk. Uh and now they also have open ended funds and so investors are able to move a complete portfolio or build a bigger portfolio M using those new entrants.

Speaker B: Again thinking about investment trusts and thinking about demand of investment trusts and new. You know everyone's always talking about younger investor with investment trusts and when I think about younger investor Investment trusts. I always think the younger, the interesting younger investors, probably between 40 and 50, is that for me is the exciting younger investor. But lots of people are talking about, you know, 18 to 30 or whatever that may be. In your, in your view, in the data that you saw, where is that demand coming from? The, when you talk about younger investor and the. What do you have a view on that?

Speaker A: I would agree if I were in control of uh, a marketing budget, I would be targeting 40 to 50. Yeah, that's. It's very attractive looking for that younger market and you understand the rationale for it.

Speaker B: Yeah.

Speaker A: But meeting those investors where they are, um, buying that media, accessing those people, it's so vast and so expensive.

Speaker B: Yeah.

Speaker A: The returns are ah, so far away. It's only really maybe a genuine proposition for the funds that have the resources and can also at the same time

Speaker B: target the other ones.

Speaker A: Exactly. Do everything.

Speaker B: Yeah.

Speaker A: If you can't do everything, and I think there's a m. Greater likelihood, uh, of return, there's more demand, you're pushing on more of an open door with that 40 to 50 group.

Speaker B: Yeah, well, it's targeting, isn't it? It's principle of marketing is segment your market and target where you feel is best and then aim your materials at, um, that from the side of the fence I sit in, in, you know, agency land, um, I don't often hear boards or marketing teams kind of talking about the newer platforms like, like Trading 212 and Toro and whatnot. Do you think that's opportunity from, from, you know, from the, from where you are or do you see that as a threat to, to marketing ambitions for trust? How do you see things?

Speaker A: I think more and more boards will see, particularly trading two 1, 2 start to feature on their registers in the next two, three years. I think they're probably on, on some. Yeah. And I think that some of these newer platforms are going to be even harder to access for marketers, for investment trust managers or they're going to be even more challenging to build relationships with.

Speaker B: Right.

Speaker A: Than the traditional, more established players.

Speaker B: Why is that?

Speaker A: Uh, I think there's two reasons. The Hargreaves, AJ Bell Interactive investor, uh, they're just bigger firms. There's thousands of people who work at these organizations. They've been there a long time. People move around the industry. You develop personal relationships. You might meet people at events and you know where their offices are.

Speaker B: Yeah.

Speaker A: Um, and they're uk. Um, a majority of their staff are in the uk. Um, and they might also have a fund Research team. You might have relationship through distribution. They might have an investment trust list or a buy list or an open ended funds list and you find a way in on that relationship. M. So they're more accessible and they're trying to offer their customers a richer uh, experience with regards to content. So you might be able to work with a platform on articles, on videos, podcasts and so that's editorially led but it's a way in. It's, it, it's a way to communicate to their end investors. At the moment a lot of these newer platforms and they don't have that content offer. They might develop it but at the moment they don't necessarily have that content offer. They are very much more, they're more fintech. So the tech first. Yeah, fintech first at first often. And they, they might be, they might have, you know, people in the UK but they might be all over Europe. I think they're very focused on growth. Very, very focused on not just UK growth, often pan European growth.

Speaker B: Yeah. Customer acquisition.

Speaker A: Customer acquisition. Absol. Absolutely. And their business models if they're low cost or very low cost, rely on very large scale. Um, and so their focus, the idea of having a relationship with investment trust issuer, it's so far away from what they're thinking about however, so that, that's all difficult. But if they unlock a new generation of investors, if they're able to get a first time investment trust holder that a uh, legacy platform would not have reached. Yeah then that's a fantastic thing.

Speaker B: Yeah, yeah.

Speaker A: So it's both, it's opportun and threats it's in.

Speaker B: I'm just thinking how interesting that is when you think about the journey that AJ Bell has gone on. Like when you were there it was, it was a smaller, it wasn't necessarily mass market but these, these entrants are almost coming in at mass market and going for scale with that hunger.

Speaker A: Their, their ambition. It, it, it, it's, I think across Fintech and many, many other industries you see that and there is this expectation and it could be the banks as well, you know, the revoluts and, and that group too.

Speaker B: Yeah.

Speaker A: They're not just trying to build a UK business, they're going straight to global.

Speaker B: Yeah.

Speaker A: And they, that it doesn't seem to them to be too difficult or, or out of their comfort zone.

Speaker B: Yeah, uh, let's, let's. Again I'm just, I'm sorry to keep coming back on this but again you've got such a unique perspective on, on marketing and platforms and Investment trust marketing. And, and I'm just keen to understand if you saw correlation with increased levels of marketing with increased inflows into, into the share register.

Speaker A: Yeah.

Speaker B: Is there anything you can tell us about that?

Speaker A: Ah, yeah, I would look and you could see um, over longer terms or medium to longer terms there's certainly a correlation between the investment trust or other financial products that advertise that market, that promote themselves and fund flows on platform. I think you can undoubtedly see that correlation. But again it was a process over time and what sometimes be difficult to do would be unpicking what's performance. Is it marketing over here or marketing over here? Was it activities they did on this website or attending a conference? And it's all cumulative. But there are some times where some relationships with AJ Bell but some relationships with some trust that only really worked with us.

Speaker B: Right.

Speaker A: So you could look at the share register and our market share or AJ Bell's market share, um, and see or how much what the holding to AJ Bell customers have in this product. Is it over indexing, under indexing and if it's over indexing and growing and there's no other marketing relationship.

Speaker B: Yeah.

Speaker A: I would stand to reason there has to be some sort of correlation with uh, with that. However, however David, the idea that one can buy fund flow that you can, we'll go and give, you know, try and give a platform some money and it's going to lead to this outcome. It's you know, the absolute. No, no, in terms of what, what it's more complicated.

Speaker B: Yeah. So I was, I was having a conversation um, with a, with a broker, um, and we were talking about marketing seems to be what I ever talk about. Um, but his view on this was the, again the, the importance of you know, good old fashioned getting in the weekend papers. And he was like get in the weekend papers and you have a big spread on a human interest story.

Speaker A: Yeah.

Speaker B: You see the impact of that on the, on the share register. Often a couple of percentage points on the, on the, you know, share register

Speaker A: and you can certainly see some discrete events, particularly the newspapers that can have that sort of immediate impact. You see it more easily with a smaller product because the impact is greater. However, again, you must remember the circulation of the Telegraph, the Sunday, all those broadsheets are not what they were.

Speaker B: No.

Speaker A: And you are reaching a particular sort of individual.

Speaker B: Yeah.

Speaker A: I still believe for marketing roi PR probably is the most effective M. If you had a very, very limited budget um, and you could afford P.R. um, and you got those opportunities, it's a fun. I would always argue it's something that most, most if not all trusts should, should be doing. Because when you do get that exposure and you do build a relationship with a journalist or they do make reference to you, not just one occasion, but it builds up. Um, and then that's very powerful.

Speaker B: Yeah. But equally it kind of goes back to the point that we're making before. Is that on its own it's probably not going to do it because you need marketing to be constant.

Speaker A: You do. And it's the relationship.

Speaker B: Yeah.

Speaker A: I think, um, the examples I was thinking about when I spoke about someone working with us over time and seeing that change in holding.

Speaker B: Yeah.

Speaker A: And the one I won't name the trust. But, um, the manager was based overseas and when he first came to present no one knew who this guy was. It was a fund that had really very little experience in marketing to retail or any marketing at all, frankly.

Speaker B: Okay.

Speaker A: And um, the manager's English was confident, but not a first language presentation skills. I'd give him a D if I was being generous.

Speaker B: Yeah.

Speaker A: But over the years kept coming back every single opportunity, every six months would try again and after. And it took some time because he had developed a relationship.

Speaker B: Yes.

Speaker A: And had spoken about what he was trying to do. And then in a year's time or six months time could say a year ago I said I was going to do this and I've delivered it and this is what we're going to do next. And built a level uh, of confidence and trust amongst the investor group that were particularly an event that we're talking about here. Um, and you could then in turn see that on the register.

Speaker B: Yeah.

Speaker A: And so it is that and relationship, that continuity, repetition and building those emotional connections with people where you've got to know someone, you've got confidence in them.

Speaker B: Yeah.

Speaker A: Particularly if they then can say, or show and demonstrate they've delivered what they said they were going to try to deliver.

Speaker B: Yeah. Stay the course. The other thing I want to pick up on is, is often with, with marketing it's, it's always coming at the point of like grow, grow, grow and um, you know, going after. Want to use marketing to, you know, expand the business or, and, and um, rightly so. That's a key part of it. But I always think an often neglected side of marketing is, is in periods of underperformance. And I personally believe it's a, it's a tool to be used to stem outflows as much as it is to grow, grow. Did you get in Your position. Did you see any examples of marketing which, which helps that you know in periods of underperformance, stemming outflows or anything there that you could share those products

Speaker A: that market all the time through the good times and the bad times. And I think instinctively a lot of people want to pull back when, when times are tough they find it very difficult. They want to distance themselves. The manager doesn't necessarily want to go stand in front of, of a room full of people.

Speaker B: Yeah.

Speaker A: And take tough questions. Um, but many, many are up for it. And I think the retail investor wants to buy and hold they don't want to sell is an emotionally more difficult decision to sell something that was to buy it in the first place? Yes, of course at the same time

Speaker B: as a behavioral character,

Speaker A: if you have something you know has been underperforming and I, I am as much you know, a ah, victim if you like of this. There are big name fund managers who have underperforming funds and you leave it sat there and it sat there and after. When are you ever going to do anything about it? But um, if you believe in the investment thesis, why you bought it in the first place, you still believe in today.

Speaker B: Yeah.

Speaker A: And you understand it. Um, I think that defensive um, approach is very, very important because there are 3,000 other funds, products.

Speaker B: Yeah.

Speaker A: Opportunities, things they could go and buy and that are trying to explain to them why they should make that sell decision. But I don't think they want to sell. So if you can give them a reason not to sell, if you can keep that relationship intact, I'd very much support that and it's very important. I agree.

Speaker B: Yeah, yeah. Let's move forward now. Um, let's, let's, let's talk about where you are now because you've recently taken on your first um, investment trust board,

Speaker A: done with CT Global Managed Portfolio Trust.

Speaker B: Congratulations on that role. I, I'm interested to understand how, how things look so to speak from the other side of the fence. What, what's, what's been your reflections of, of you know, first, first few months in the, in the role?

Speaker A: Well, uh, it's, it is a very, very different role. Um and it's so far it's been terrific. I've really enjoyed this getting to know the rest of the board and how seriously and how deeply they think about the trust, the, the investors and everything around the fund. And um, it's, I've been really encouraged at ah, how welcoming and open they've been with me, how much they want to learn and um, how Enthusiastic. They are. For the fund, which I am as well. It's fantastic product.

Speaker B: Yeah.

Speaker A: And so, so far, it's been really interesting. And the first board meeting, full board, was pretty scary. And I don't think I embarrassed myself. And I, you know, I've been invited back. So, so far. So far, so good.

Speaker B: Oh, uh, fantastic. And you've got some very experienced board members on there as well, which is. Which is lovely, from hearing what you're saying. You're actually an advertisement for investment trust, because it's, It's. It's lovely to hear how impressed you've been, even within the industry, when you. When you go into the boardroom and you're suddenly seeing the insider boardroom about the care and attention that the boards are taking for. For investors.

Speaker A: And I think the trust that I'm with, it's the way I use the words, since it's in the DNA M. And it's a retail first investment trust.

Speaker B: Yeah.

Speaker A: And the rest of the board are completely aware of that. What I'm surprised about, perhaps, David, is how few people from the platform world there are in the net world.

Speaker B: Right.

Speaker A: AJ Bell Hargreaves have been going 30 years or so.

Speaker B: Yeah.

Speaker A: There's been generations of executives that have worked in those businesses and they haven't transferred. Where are they?

Speaker B: Yeah, yeah.

Speaker A: Where are they? Um. And have they not wanted to make that step? Have they not been invited? They're not being considered.

Speaker B: Yeah.

Speaker A: And I'm surprised at how vital platforms are for investment trusts.

Speaker B: Yeah.

Speaker A: How few platform professionals the AIC are blessed to have. Richard Stone, who is obviously from the platform world. So here's someone who can share his experience and advice, but there's only one of him and he's going to cover that. The aic.

Speaker B: Yeah.

Speaker A: And on an individual board level, there are very, very few, um, platform professionals.

Speaker B: Yeah.

Speaker A: Um. And I think there are a combination of, as I said, retail first funds. But it's not always the case.

Speaker B: No.

Speaker A: I. I, in my A.J. bell days, presented to many, many trusts. And. And A.J. bell would be on the register of all of them.

Speaker B: Yeah.

Speaker A: And there were times there'd be people in the room who would not know who A.J.

Speaker B: bell were. Yeah.

Speaker A: They wouldn't know the service that we provided, who our customers were. They had never used or even thought to download an app to see how it worked, whether it be an AJ Bell or Hargreaves or anybody else. Yeah.

Speaker B: Ah.

Speaker A: And. And I was sometimes surprised by the lack of curiosity. Why wouldn't you want to know this name? You See on the register.

Speaker B: Yeah.

Speaker A: Why wouldn't you want to understand the experience of being a holder on one of these apps? And so I think the board I'm on my colleagues top marks but it's not necessarily something that can be a uni. It's not applied universally.

Speaker B: No. No.

Speaker A: And, and I think the, the, the individual NEDs need to take some personal responsibilities. Um, and you know it's only a small thing but to understand their holders experience.

Speaker B: Yeah.

Speaker A: And the other lesson I've learned, you know, that is we knew it before how difficult it is to have those platform relationships and it's not now just those, you know, big legacy names we mentioned trading two on two and um, free trade as you mentioned. There's, there's Etoro, there's Saxo bank, there's capital.com, there's Revolut, there's you know, all of these other disruptors, banks, platforms. Some offer investment trusts, some don't.

Speaker B: Yeah.

Speaker A: You know, is anyone auditing whether their funds even appear on these platforms? Um, and then if you're looking at how voting works, are you relying on being told if you know who can vote or are you actually gonna go and find out yourself?

Speaker B: Yeah.

Speaker A: Personal responsibility. Um, I think it's incumbent on my fellow nerds to, to be curious and to, to find out for themselves.

Speaker B: And I think, I think it's, it's shifted, hasn't it? Because I, I mean I've um, in asset management investment Trust space for 15, 20 years and retail in many ways was a, was almost a dirty word. You know, retail customers, you've heard the term collectively I'm sure, were banded under Mrs. Miggins when talking about them. Quite derogatory I always felt. And it's, it's, it's, it's only relatively recently I, I think that investment trust in particular suddenly thought right, we really need to get hold of the retail audience because of the, the forces at play on the investment trust from consolidation of wealth managers and such for everything that the missing lever. Great documentary if you haven't seen, uh, should be considered. Um, all of these things come in to, to play but now like you say, it's up to boards and NEDs to really start to lean in and understand this market.

Speaker A: And I, I think so. Um, and you mentioned Mrs. M. Miggins term. Um, and I feel really strongly about this, um, and having respect for your holders.

Speaker B: Yeah.

Speaker A: And you know it's corny but I, I felt in my days with AJ Bell when we had all these events and meeting thousands of invest Thousands of investors. And some of them, you, you have a better match with, you know, you enjoy spending time with more than others. And there's some who are more challenging and there's some who are wonderful. Um, but they're all history of human life. They're all valid.

Speaker B: Yeah.

Speaker A: They all count. They all have their own journey, their own goals. And, um, you don't have to necessarily even like them, but you have to respect them.

Speaker B: Of course.

Speaker A: Um, and they are entrusting you into,

Speaker B: into their future, aren't they?

Speaker A: Absolutely. And it matters. And I've spoken to thousands and thousands of investors and the ones that stick in the mind often, and the people who've told you their story, what they're investing for. And you often hear about the, the pressure people feel taking that responsibility. If you're managing your own pension.

Speaker B: Yes.

Speaker A: And that may be. Maybe that's your and your wife's or your family's wealth.

Speaker B: Yeah.

Speaker A: And you're doing it yourself. If you get it wrong, it's massive.

Speaker B: Yeah.

Speaker A: Um, and the burden that can be for people, the emotional burden and can be really challenging for people. And then, you know, if they're dismissed as, oh, you know, the hoi polloi or these irritating questions from, um, holders. Um, I, I really, that really gets me.

Speaker B: Yeah.

Speaker A: Yeah. And you have to, you have to love them, you have to want to, you have to want to have those relationships and be interested and to be interested in them. Absolutely. You're thinking about what is my fund or my product doing for that person's life? And there is this mix between, I think, funds or investment trusts that have considered that and those that just want to sell a product.

Speaker B: Yeah.

Speaker A: And they think, well, we run, you know, who's the next margin? Who's the next buyer? Who can we sell our fund to? Let's try retail.

Speaker B: Yeah.

Speaker A: And rather than it being considered the other way around, you know, what can we do for them? And, um, are we something that's right for them? You know, how are we going to help solve a problem these people have?

Speaker B: Yeah.

Speaker A: Um, and how are we going to make them part of it? And the, if you like the sales led and only sales led, it's all about distribution. We just want to sell some shares to, uh, some retail holders. It's it, it. I mean, if you throw enough money at it, you might be successful with it, but it's, it's not, I don't think. Yeah. It's not the right way of doing things.

Speaker B: No, it's, uh, it's great to. It's great to see you speak with such passion about that as well. It's uh, again it's something I feel myself and I, I think if, if we, if we sort of think about taking everything that you've learned and now in your, in your, in your role as a uh, as a board member, if you had something to share with, with other investment trusts or other boards, what you'd say as being your, your takeaway point for them to consider. I mean given what you've just said. I think we know, but what if you had to sort of encapsulate that under one point to kind of, okay, go away. Think about this. This is how you can market to retail more successfully. What would that be?

Speaker A: I think, and I've said it before to some boards, I think the, the fact that retail are uh, emotional rather than rational buyers, um, and they buy a story what something can do for them and where they are in their life and presenting simply where the top performing fund in the last three quarters.

Speaker B: Yeah.

Speaker A: You know, it's not enough um, or factual, dry, factual information. You need to have um, an emotional connection. In a world of choice. There's a great deal of choice for retail investors. Um, and having a reason to choose Funday rather than an ETF or any other product in the market. You must have that emotional connection with them and that will sustain and endure through the bad times as, as well as the good. And m. So think about is there anything you're communicating with holders, potential holders that generates an emotional response and I call it the sizzle. So you know, you can explain what something is, but the why it matters. What's that going to do for you? That's what gets people excited and that's what I think many investment trusts could. Um, that be my tip.

Speaker B: Yeah.

Speaker A: Consider the emotional connection.

Speaker B: That's fantastic. Thank you. Thank you so much Roland for uh, sharing all of your, your insights that you've, that you've gained throughout your. Your very uh, varied career, but always with a key natural thread. And I'm, I'm uh, excited to see what, what the future holds. And congratulations with uh, your, your recent board appointment. I think they're very lucky to have you.

Speaker A: Thanks very much, David. Thanks.

Speaker B: Thank you. Thank you for listening today to the Growth Engine. If you enjoyed this episode and like to hear m. More please do subscribe wherever you get your podcasts from and follow us on LinkedIn for regular updates or on um, hubagency.co.uk thank you and see you next time.