There have been many cases when financial services firms with established brands have ventured into related but different businesses for which they are most widely known. Retail banks offering wealth management services to the high-net-worth and ultra-high-net-worth markets are prime examples.
In such cases, managers are faced with the difficult question of how to brand the new entity. Is it better to leverage the brand equity of the parent and hope it translates to the new business and market? Or, is it better to create an entirely new brand and start de novo without any legacy associations?
Fidelity faced this question when it decided to create a distinct unit to serve the institutional market back in 2005. The retail fund powerhouse opted for a separate brand and therefore formed Pyramis Global Advisors.
Last week, Fidelity announced that it is abandoning the Pyramis brand. In its place, the firm is launching a new business, Fidelity Institutional Asset Management (FIAM) that would combine the distribution platform of Pyramis with that of Fidelity Financial Advisor Solutions. According to the President of Fidelity’s Asset Management unit, “by establishing Fidelity Institutional Asset Management as a dedicated distribution entity …, we are better positioned to meet the evolving needs of our clients, while accelerating our growth in the institutional marketplace.”
Whether reverting back to the Fidelity brand will accelerate growth in the institutional market remains to be seen. The association with the Fidelity “retail” brand may end up being no more helpful in the institutional market than starting Pyramis.
But there is a lesson to be learned from this example. Even a world class brand in one market can make a branding mistake in another. When entering a new market every effort should be made to understand that market’s key drivers, competitive context and brand perception.