Article n°3 - 9 min

What Can Asset Managers Learn From Luxury Brands?

Aesthetics matter

Create an ideal world

The power of values

Why luxury brands

Luxury brands from the likes of LVMH and Kering have mastered the art and science of shaping perceptions of their products. So well in fact their products don’t require actual selling at all, they sell themselves. That’s powerful branding in action.

We see a resemblance between luxury and asset management brands. Both require a significant investment and the buyer’s decision-making is not spontaneous.

Where they differ is the ability of luxury brands to willingly shape their products perception and not allow their products to do all the talking. They do this by creating desire, exclusivity, empowerment that aren’t linked to their products themselves.

Emotions are your friend

Going back to our intro, luxury brands go beyond talking about how well their products are made and what rare material they’re made of.

They focus on things people actually crave: status, empowerment, exclusivity, beauty.

This is in turn creates and builds desire which leads to the sale organically, without “pushing” the sale forwards.

Harley-Davidson doesn’t only sell motorbikes, they sell the sense of belonging to an exclusive social club and the adventure that comes with it.

Asset managers should uncover what their ideal investors actually crave and that becomes the benefit of your expertise/services. Sure people want high risk-adjusted returns but what they crave is something more.

Don’t be afraid of the intangible

We get it. Finance is about measurable data and facts.

The bad news is that people don’t base their decisions on these things, or at least very rarely. Despite this, the financial services industry struggles with the fact that investors are also human beings with feelings, desires and emotions that guide their decision-making.

Don’t let emotions intimidate you.

The biggest challenge asset managers face is convincing decision-makers internally of the importance of emotions in the industry. If you don’t agree internally, you won’t be able to create a strong brand with those emotions in mind.

Luxury brands have understood that people don’t act rationally. No rational person earning the average income would purchase a luxury item because it’s made from genuine leather in Italy.

Don’t sell, educate

Luxury brands also use customer in-store experience to increase the value of their products and put people in the right state of mind to buy.

People don’t want to be sold to, they want expert advice: more than two-thirds of customers want expert advice when purchasing high-value items (Bryan, 2024).

Salespeople in luxury stores and in fact ambassadors for the brand, they educate and give personalised advice.

Applied to asset management

Teach your team about your origin story, values, purpose and vision so that they can relay that information to prospective investors.

They should become your brand’s ambassadors.

Ensure you deliver an experience that aligns with your brand’s values and be clear about what emotional state you want your prospective investor to be in after ending the call/meeting with you.

Don’t be obvious

What would you think of a dentist telling you that he is professional, focused on you, that he will treat you with integrity and that you should trust him? You would find it weird and worrying.

These are what we call ‘hygiene’ factors. They’re expected and don’t allow for strong differentiation.

One study of over 500 asset managers worldwide showed that this is how most asset managers describe themselves. They focus on the obvious.

Values are what makes us human. They determine how we respond to the world and what we think is right or wrong at a subconscious level.

Values help us make those snap judgments when we meet a new person, encounter a product and service and they inform our major life decisions.

Our Brand Emotion Equity™ framework

Not sure how to go about infusing emotions into your brand?

Not sure what these emotions actually are?

At Varig we’ve developed the Brand Emotion Equity™ framework where we help you figure out these emotions and what we need to do together to apply these emotional states in your messaging and value proposition.

If these emotions are not mapped out and taken into account, what could happen is a imbalance between what you say about your solution’s rational benefits (i.e returns) and its emotional benefits that prospective investors truly desire.

It’s more than just your services

Luxury goods are as real as you and I but they originate from an ideal world, an ideal way of being. It could be elevating day-to-day life, making the world more sophisticated, more beautiful.

This doesn't only apply to luxury goods: Apple’s purpose to think differently about the world, challenging the status quo while making beautiful products.

Sell ideas, dreams, not only your expertise.

“The very essence of luxury is based on the inflation of its symbolic value over the functional value” (Olbertova, 2019).

Client experience is everything

Applied to asset management

Asset managers need to think about this ideal world they want to create. This encapsulates their purpose in other words why they do what they do.

An example would be an ideal world where everyone feels secure about their future. Security would the name of the game and emphasised throughout the firm’s messaging and communication.

People need beauty

People want to interact with things that are aesthetically pleasing. Luxury goods might seem like the only obvious example where that is true but beautiful app and website interfaces, computer design, architecture, the pen you’re writing with, all of these are every day examples of beauty.

Applied to asset management

Asset managers need to realise that the concepts of “beauty” can be also applied to the industry. This beauty can come from your brochures, website, business cards, pitch decks and so on.

Beauty differentiates in a competitive market and given how bland the asset management industry looks, a little bit of beauty goes a long way other than make your firm truly stand out and show you care about how you present yourself.

Common values in asset management

This study on over 500 asset managers of various AUM sizes revealed that a majority used the same values to describes themselves :

Excellence, Professionalism
Integrity, Ethics
Team spirit, Collaboration
Client centric
Responsibility
Innovation, Creativity
Accountability, Results driven
Entrepreneurship
Transparency
Diversity and Inclusion

Tips for asset managers

You should focus on differentiated and informative values.

Having integrity and being professional (in a sector where trust is not only expected but absolutely crucial), is not differentiating.

Informative values are values that allow investors to know more about you and understand how you see the world. Being transparent and client-focused doesn’t say a whole lot on who you are and what you believe in. It’s as if a restaurant was putting on their menu that their food is not store bought and that their waiters are very friendly to customers.

Turn these insights into reality.