Selling your story...

That's the meat of the issue, isn't it? Selling your story. But what to do if you're a smaller fund or a less well known fund or maybe you feel your story isn't as compelling as some? The First Funds story provides some insight into the ins and outs of the publicity and marketing needed to build a brand and what one fund is doing.

First Funds is the mid-sized proprietary fund family of First Tennessee Bank. The funds have names like Growth & Income Portfolio, Bond Portfolio, Intermediate Bond Portfolio, and Capital Appreciation Portfolio--not an Aggressive, an Internet, or a Rotating Enhanced NextBigThing Sector name in sight.

But the funds, particularly the Growth & Income Portfolio, have been doing well enough for the bank to want to expand distribution from the mainly southern and mainly old customer driven sales that currently exist. So how to sell funds that use the tagline "Discipline, Consistency, Patience" in today's fast-paced, "what have you done for me lately" market?

Edward Goldstein, managing director of Highland Capital Management, a sub-advisor to First Funds and the portfolio manager of the Growth & Income Portfolio sat down with The MutualFundWire.com on a visit to New York for First Hand Funds' first press junket to describe the changes that have recently taken place at the funds

Goldstein's fund, a large-cap value fund, at about $900 million, accounts for almost half of the assets under management at First Funds. It is also the best performing and highest rated of the family, and its consistency is the main reason for the increased distribution of the funds.

Highland, the sub-advisor for the Growth & Income portfolio, as well as the Bond Portfolio, was started in the late 80's by Goldstein's father-in-law and three other ex-Goldman Sachs executives.

Goldstein himself worked for the New York securities giant from 1976-1989, spending his last three years in Japan. Upon returning to the U.S., Goldstein joined Highland and stayed with the company after it was folded into First Tennessee Bank in 1994. Highland had insisted upon a certain degree of autonomy when agreeing to the acquisition, including continuity of management and hiring/firing control for the future.

The Growth and Income portfolio has been doing well since the time of the merger, but hasn't been well known because of its quiet style and its limited distribution, mostly within the Tennessee borders. Late last year, however, First Tennessee and Highland decided to change all that. In order to get in the door of a greater range of broker/dealers, several changes had to be made.

The main difference, according to Goldstein, was the increased emphasis on distribution and marketing outside of Tennessee, including the hiring of three new sales managers and their integration into the marketing strategy of ALPS Mutual Funds Services, the funds' distributor for the last three years. Another was the retention of a PR firm, the New York-based Mount & Nadler, who represent several other mutual fund companies.

ALPS, a Denver-based fund distributor, will certainly pay more attention to First Funds than one of the distribution giants would. First Funds, at $1.8 billion under management, is its biggest client.

To support ALPS distribution, First Funds hired three new salespeople, an internal wholesaler to work in Denver with ALPS, an external wholesaler to work in Washington, DC for the Northeast corridor and an additional wholesaler to handle the Tennessee sales.

Regional broker dealers in the South such as Morgan Keegan and J.C. Bradford and in the Northeast such as Polaris Financial Services, Nutmeg Securities and American Capital Corp. were targeted, with the sales force selling the story of First Funds to them, training them in sales of the funds, and offering assistance via promotional tools. These broker/dealers then would assist in the distribution of First Funds via conference sponsorships, promotions within the broker/dealers, and advertising in company publications.

David Rydzeski was hired as a regional vice president and placed in charge of sales within the Northeast. First Funds became available within all 50 states at the beginning of this year, so Rydzeski became responsible for the distribution of the funds through financial intermediaries from Virginia to Boston. This represented the beginning of First Funds distribution beyond the Tennessee borders.

Mary Frances Fox was also hired as regional vice president, responsible for the expansion of the sales channels within First Tennessee and to the broker/dealer community of Tennessee. The First Tennessee channels include a trust division, a brokerage service, and correspondent banks.

Chad Harwood is now in Denver as an internal wholesaler, supporting the efforts of the external sales force and the brokers now involved in the distribution of First Funds.

To further support the sales and marketing efforts, a public relations firm was hired in order to sell the story of the funds. Mount and Nadler, hired in January of 1999, has helped to establish a presence in the media by connecting a face to the funds by introducing the fund management to the media and letting those closest to the history of the fund explain it. Most new clients are brought to New York, because of the strong presence of the financial press in the city, and individual meetings arranged. During his visit to New York, Goldstein spoke to Barron's and Forbe's among others, as well as appearing on Bloomberg television.

 

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