Hedge and PE fund marketing unchained?

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Financial services marketing breaks free. Yes, it looks just like this.

Let’s talk “new territory.”  For all the ambiguity and trepidation around financial services marketing, players in regulated industries are finally getting a handle on which communications tools can be most effective.  But wait – just when you thought it was safe to go back in the water, we’re now looking down the tunnel at the oncoming train of loosened restrictions for hedge and private equity funds.

These high powered entities have always been limited in their capacity to market themselves, but the Jumpstart Our Business Startups Act (JOBS Act) will change all that.  After a frustrating waiting period, the Act is on the short list of approvals for new SEC chief Mary Jo White, who plans to make the JOBS Act one of her early priorities as she takes the helm.

When the ball starts rolling, hedge funds and private equity leaders will be able to market directly to their pool of investors.  For many, that means institutional investors, but some firms are getting the jump on things by lowering their barrier to entry so that individual accredited investors can get on board.  Carlyle Group is leading the pack, dropping the minimum investment to $50,000 for some funds, while Blackstone and KKR are taking similar measures.

Douglas MacLean, an EZG friend and colleague with Armor Compliance, has been watching the trend materialize and believes that the new law could mark a turning point for smaller firms, as well.  He points out that the current rules and regulations governing hedge and private equity funds are subject to interpretation; smaller funds that were constricted in their marketing efforts for compliance reasons have been competing at a disadvantage.  The JOBS Act will create a level playing field, and private funds that want to advertise will know the rules of the road.

We see two clear implications for two different audiences:

  1. Hedge funds and private equity firms that are smart and swift in getting their message out will win.  Regardless of how long they may have been in business, the JOBS Act creates a new first-to-market game that will allow some leapfrogging in the marketplace.  I’m not proposing we’ve reached a “go loud or go home” inflection point, but firms that stay behind the curtain are likely to lose market- and mind-share in the coming years.
  2. Financial advisors are going to be faced with more noise, more questions from clients, and more decisions to make. As marketing messages start to reach individual investors, their financial representatives will need to be educated on which funds are the right fit and which may distract clients from their investment goals.

Whichever side of the equation you’re on, this will be a fascinating marketing adjustment for financial services.  The trick will be getting in front of the message while keeping transparency top of mind for the sake of investors.  The game is afoot!

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One Response to “Hedge and PE fund marketing unchained?”

  1. Africa Offers Better Returns On PE Investments Amidst Risks: KPMG | Allana Potash Blog Says:

    […] Hedge and PE fund marketing unchained? (ebbenzallgroup.wordpress.com) […]

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