One of the things I learned while working in private banking is that many relationship managers and sellers confuse the power of a familiar brand with their personal skills. All too often, relationship managers are successful at a large company and think that this is their skills. So when they leave the company to become a member of a smaller competitor or start their own company, they are surprised how little of their customers follow. Customer money can be extremely sticky.
Research by Julie Agnew and her colleagues Show that the same applies to asset management companies.
They invited 949 adult Americans who are currently working and saving for retirement to participate in a laboratory experiment. In that experiment they were asked to invest in various funds in their pension plan. The trick, as you might have already guessed, was to show them the same fund information, but to have them choose between a White Labelfonds (unknown asset manager) versus a brand company and then vary the brands of the companies that supposedly run the money. Moreover, they asked the participants who argued how much they trusted different asset management companies.
So here is how the expected return for the funds varied between funds from companies that invested many versus companies that did not trust that much. It was expected that funds from trusted brands would have a considerably higher return in all asset classes.
Expected returns of funds of trusted versus non -confidence brands
Source: Agnew et al. (2025)
Likewise, investors thought that funds of fewer trusted brands yielded a loss. The result of these brand -driven prejudices is that investors allocate more money to funds from a trusted brand than funds of as less familiar brand.
Probability to lose money in funds of trusted versus non -confidenceed brands
Source: Agnew et al. (2025)
It is clear what this means for asset management companies. Brand management and brand reputation are responsible for a considerable part of the control. As soon as a brand is damaged, it is often better to simply rename the fund and get the brand out of the name to reduce the negative associations of investors with the fund. But if you have a good brand, make sure that your funds carry that brand all in their name, so that investors get ‘warm glow’ when you think of their investments.
#power #trusted #brand