Alternative firm leader explains how funnel strategy and omni-channel approach is essential to aid client understanding
In the world of private investments, real estate stands out as a unique asset class, offering advantages like stable returns, portfolio diversification, and a hedge against inflation. Yet, navigating clients through the sea of alternative investments can be challenging for advisors.
Because private real estate is labeled as a “private” asset class, it often gets lumped in with the broader category of "private investments," which can include higher-risk or less-understood assets like private equity, venture capital, or hedge funds. It can be a challenge for advisors to demonstrate meaningful opportunities while differentiating private real estate from its more volatile cousins.
According to Kathy Gjamovska, VP, Marketing & Communications at Equiton, marketing is an advisor’s best friend when it comes to educating clients about what really sets these assets apart.
“We're helping to educate and mythbust, in some ways, that being involved in alternatives isn't just things like cryptocurrency,” she says, pointing to the fact that private Canadian apartments have generated positive returns through six major market meltdowns over nearly 40 years.
“We're talking about multifamily apartments,” she says. “It's an alternative but also a necessity - it's shelter. That's a key message for us, that you can get involved in the alternative market but in a category that is considered a necessity. That's a big part of how we educate.”
In recent years, the private real estate market has become increasingly accessible to individual investors, a domain once primarily reserved for high-net-worth and institutional investors. Technological advancements and the development of new investment products like Real Estate Investment Trusts (REITs) have democratized access. Asset management firms like Equiton have pioneered investment funds tailored to smaller investors, further widening access.
Unlike equities or bonds, real estate is a tangible asset that provides the potential for both income through rental yields and capital appreciation. It also offers diversification benefits, as its performance is often not directly correlated with stock and bond markets. Additionally, real estate can act as a hedge against inflation, as property values and rental incomes typically rise when prices do. On the flip side, these funds can present liquidity challenges, often requiring investors to lock in capital for a specific period, making it difficult to quickly convert holdings into cash.
But finding ways to articulate these merits and challenges in an investment landscape brimming with competition can be challenging. Gjamovska suggests that balanced, cross-channel marketing is the most effective way to educate clients.
Topping her list, Gjamovska emphasizes the importance of a well-defined funnel strategy. At the top of the funnel, it's crucial to focus on high-level education, gradually diving deeper into specifics as potential clients move down the funnel. For instance, Equiton starts by introducing people to the concept of alternative investments, followed by an emphasis on private real estate and ultimately, a discussion on equity funds.
Case studies are also an essential component of an effective educational strategy, Gjamovska says. “I could tell you I'm funny or I could tell you a joke and make you laugh,” she says. “So, it's that type of thing. Instead of just saying this is what we do, showing what we do, tends to really work for us.”
While some advisors who rely heavily on word-of-mouth and personal relationships, might be hesitant to pivot to modern marketing methods, Gjamovska believes the changing dynamics of consumer engagement necessitate the shift. “As a marketer who has done it my whole career, I'm a strong believer that you've got to try a lot of different things - test and learn. Fail fast and see what works and what doesn't,” she says.
In the age of digital immediacy, utilizing multiple platforms and a variety of content is non-negotiable. Short videos, long-form articles, and social media posts all play a part in helping clients understand complex financial products and how they fit into broader financial goals.
Gjamovska emphasizes the need to meet clients where they are—whether it's on Instagram or financial news websites.
“We try to provide content at different levels, because they may have some very sophisticated investors who really ask sophisticated questions - so when you look at our annual or quarterly reports, it's more in depth - and then we've got shorter content that's really for someone who maybe doesn't understand the category or is newer to the category. We try to provide a variety of content depending on who we're talking to.”