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When More is More

Star managers are often the reason investors choose a particular fund or firm to manage their money. These well-branded “masters of the universe” instill confidence and trust by ensuring that a proven expert is at the helm. But what happens if the star abruptly leaves or is no longer in charge?

For most firms, such a calamity is met with a flurry of last-minute communications to anxious investors and the media hurriedly crafted to assure them that it is still “business as usual.” With the firm in crisis mode, communications and PR become tactics invoked at the last minute in the hope that a short burst of triage messaging can quell the panic and right the ship.

We would like to propose a different strategy. Firms that have branded stars can avert such a crisis by building a foundation of ongoing communications designed to make a management transition easier and less traumatic for investors.

For example, highlighting the depth of resources and the important role and responsibilities of a star manager’s lieutenants early on can be effective in dampening potential shock when a leader departs. Emphasizing the value of the investment process and the contribution of research teams in advance can be instrumental as well. These steps, if implemented properly, will not diminish the value of a star manager to the overall brand.

The most effective communications programs are often those that anticipate critical risks and implement strategies and manage them in advance.