The Power of Narrative: “We’re different because…”

“We’re different because…” 

In the investing business, advisors like to adopt stories and narratives as a kind of shorthand to express what they believe and how they deliver their product or service to clients.

There is nothing inherently wrong with this most human of traits – neolithic man used cave paintings to describe their hunting techniques to younger generations four thousand years ago. It’s how we explain and how we understand.

A recent study by Cogent bears this out – the research firm shows that the asset management shops with the best “story” are the ones with the most money-raising momentum among financial advisors who allocate their clients’ capital….

Cogent produced an Advisor Investment MomentumTM (AIMTM) score for 24 leading mutual fund providers, based on advisors’ stated intent to either increase or decrease investments with those firms.

aim score

As reported in the study, the leading firms in investment momentum correspond to the firms with the strongest satisfaction ratings in the area of company investment philosophy, which has  increased in importance to become the top driver of advisor loyalty this year. Investment performance remains critical, but serves more as a table stakes criterion than an accelerant to loyalty or brand differentiator.

“Providers with the strongest investment momentum are successfully communicating their firm’s distinctive investment philosophy,” said Senior Director Meredith Rice. “Couple that with advisors becoming increasingly focused on portfolio diversification and risk management, and the stage isset for moving assets to managers that have something beyond a simple  performance story to tell.”

Advisors talking with clients prefer to recommend funds with a strategy that can be put into a greater narrative that encompasses the advisor’s own value-add. Factor-based investing, the premise that DFA funds are built on, is a great example of this. Risk-conscious investing, long considered the bailiwick of PIMCO, is yet another.


Cogent Research


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