In December 2018, a record $75 billion came out of U.S. equity mutual funds and ETFs, according to The Wall Street Journal. In times of heightened market volatility, investors often overreact to short-term volatility by pulling money out of stocks.
In turn, asset managers often overact to short-term, market-driven redemptions by cutting sales and marketing expenses thereby stunting the quality of the firm’s sales pipeline. While these short-term tactical decisions may save a few dollars, they can often impact the firm’s long-term growth objectives by reducing future asset gathering potential.
No matter the market direction, stay focused on long-term growth plans and be proactive in your sales and marketing efforts. In times of volatility, instead of cutting back, increase your communication efforts in an attempt to retain current assets and, secondarily, raise new assets. Keep your sales momentum going. Importantly, stem redemptions by reaffirming to your clients the reasons why they bought your product in the first place.
Regardless the market environment, new business development and asset gathering should be a constant as success is determined by growth initiatives not pipeline expense reductions.