Will John Paulson rent a billboard on I-95 promoting his $14 billion hedge fund? Is there a George Soros World Cup in the offing? Probably not. But there are a lot of people in the hedge-fund industry who are excited about the fact that hedge funds can now advertise, sponsor sporting events, and generally reach a wider audience of potential investors.

But, as with everything regulatory, it’s not quite that simple.

The industry’s ability to advertise came about when, earlier this month, President Obama signed the Jumpstart Our Business Startups Act, better known as the JOBS Act. Its main goal was to make it easier for small businesses to raise money, with which they would hopefully create more jobs. Tucked into the act was the lifting of a ban on general advertising and solicitation that hedge funds, with varying degrees of fidelity, had adhered to.

Before you assess how meaningful the new law is, you need to understand a few basics. Hedge funds by rights should be regulated by the Investment Company Act of 1940, which oversees mutual funds and most exchange-traded funds. But in order to avoid the restrictions on redemptions, leverage, and incentive compensation laid out in the 40 Act (as it’s known), hedge funds generally use one of two loopholes known as 3(c)(1) and 3(c)(7). Both exempt hedge funds from most 40 Act requirements but limit their investor audience.

In this case “not so simple” is perhaps understated. As experts in marketing 40 Act funds, our firm is well versed on advertising funds and the investor protections that govern what can and cannot be said or shown. In general, 40 Act funds do not have restrictions such as the number of total investors in a fund or minimum asset or income requirements to invest. This we have learned over the years from hedge funds and other alternative investment managers.

Those considered 3(c)(1) funds allow up to 99 “accredited investors,” defined as someone with a net worth (not counting a home) of at least $1 million or an annual salary of $200,000. Section 3(c)(7) funds are permitted more investors, so long as they’re all “qualified purchasers,” having $5 million in investable assets. (There are many other nuances to these definitions, but this will do for now.) One of the two changes the JOBS Act made was to allow an increase in the maximum number of investors in 3(c)(7) funds to 1,999 from 499. If a hedge fund wants more than 99 accredited investors or 1,999 qualified purchasers, it will have to register with the Securities and Exchange Commission.

THE SECOND, AND MORE provocative, change is the lifting of the advertising ban. Because of the restrictions on whom they can take money from, hedge funds generally were only allowed to let people with whom they had a preexisting, substantive relationship invest; they were prevented from advertising to or soliciting the general public. Some funds took this more seriously than others, requiring passwords to access their Websites and never uttering a word about performance, while others interpreted the rules a bit more loosely. “It’s always been a gray area,” says Mike Seery, a director at financial advisory firm Kinetic Partners.

The ability to reach a wider audience will have a much bigger impact on smaller funds, particularly those with less than $250 million in assets that allow accredited investors. (Most household-name hedge funds permit only qualified purchasers.) Because they’re still appealing to a fairly wealthy crowd, though, advertising likely won’t be too mass-market. Some have speculated we’ll see golf or tennis tournaments sponsored by hedge funds, and an increase in advertising in, ahem, publications that speak to a more sophisticated and wealthy audience.

Many hedge funds have brand name portfolio managers, funds or investment processes (rise of the quants). Numerous funds require positioning from high pedigree start-ups to the vast majority of funds that aspire to their next AUM threshold.

“A fair number of smaller to mid-sized firms are eager to see less onerous restrictions in marketing to investors,” says Ken Heinz, president of Hedge Fund Research, which compiles and analyzes data on hedge funds. “I don’t expect this to have a meaningful impact on larger funds, especially those with more than $5 billion in assets.”

THERE ARE STILL A fair number of kinks to work out, warns Kevin Scanlan, a partner at the law firm Dechert. Funds generally can accept up to 35 nonaccredited investors, but funds that avail themselves of the relaxed advertising and soliciting rules won’t be allowed any nonaccredited investors. “My take is that at the end of the day, the investor base for these funds won’t be any different,” Scanlan says. “Smaller funds are hungrier for new investors, but at the same time have smaller budgets to spend on advertising.” Also, he points out, most funds haven’t contemplated advertising costs in their fund documents. That means they could end up a manager expense rather than a cost that can be passed on to investors.

Then there’s the issue of the additional rules the SEC needs to write. Now, if hedge funds advertise, they’ll need to prove they took “reasonable steps” to verify any new investors are accredited, says Don Babbitt, a consultant at Kinetic Partners and former SEC attorney.

And the SEC isn’t likely to rush its opinion as to what those reasonable steps are. “Congress said the SEC had 90 days,” Scanlan says. “But given all they have on their plate, I think we’re looking at the end of the year.”

Technically, the summer is when this should come into play. In our experience, firms are aiming to begin work in the summer for a fall launch.  To date, funds seem to behaving appropriately. We have no current requests for photo shoots with swimsuit models, outlandish promissory statements or any other indications of anything other than strong positioning of investment philosophy and processes. It is similar to our work with institutional asset managers, even more so than with retail funds. We are secretly hoping for someone to step up quickly enough to sponsor the US Open this year.

Once the SEC passes on modifications, no longer will funds not have public web sites, advertise (appropriately) or remain silent outside the immediate reach of the owners and sales people’s contact list.

Establishing a brand, staking a claim to an investment style is already underway. As we meet with funds, we are finding planning stages are moving to action. The preparation has begun.

Hedge funds are once again defining themselves. Beyond the deck and fact sheet, hedge funds are now deciding on how to project the right image.

This means digging deep into brand, messaging and declaring a voice for the firm. Firms are contemplating a look and feel that projects the investment opportunity, the strength of the investment process and the pedigree of its managers and analysts.

We are already working with firms who went the alternative mutual fund route, and now, on to the heart of institutional quality funds.

AIGA Data Visualization Event

One of the most common design challenges our financial services clients face is how to translate data into meaningful stories that drive home their messages. Always interested in data visualization trends, we recently attended an AIGA (The American Institute of Graphic Artists) event, which hosted a discussion between two firms, Hyperakt and TicTrac, who develop info-graphics and use data in new and interesting ways.

AIGA Data Visualization Event

Information Graphics that Effect Change

Hyperakt is an information design firm focused on driving cultural change. Their goal is to tell a story by creating compelling presentations with visualized data. The presentation stressed that info-graphics are powerful visual tools that can be used to persuade an audience and our responsibility as designers is to provide ethical and truthful representations of data and content. Hyperakt is responsible for many of the info-graphics seen on GOOD, a constant inspiration to the work we do at Carpenter Group.

Info-graphic created by Hyperakt

“I enjoyed hearing about Hyperakt’s goals and process. We face many of the same issues in the work we do here. Almost every project I have worked on, both web and print has involved data visualization. Although Hyperakt’s work is more playful, we share the same issues when it comes to getting a direct point across to users.”
- Eric Pier, Art Director

Personal Data Visualization Platform

TicTrac is a personal analytics platform that allows you to track all of your activities in one place. The data is collected, compared and visualized to shed light on how your habits correlate to outcomes such as: how eating-out correlates to weight gain or how the number of emails you receive correlates to your level of stress. This new personalized data collection and visualization, not only reveals insights to the user but can be valuable information for advertisers and targeted marketing. Martin Blinder (founder of TicTrac) also suggested a future where individual users would be able to sell their own data to companies directly, his analogy: “data is the new oil.”

TicTrac sample screen

“I know that personal data provides valuable insights to marketers. However, Tictrac’s presentation reminded me how important it is for that data to be translated into simple and clear visuals to enhance understanding and usability. This event was truly an eye opening experience to grasp the true potential of data visualization in our business.”
- Steve Kim, Design Director

The AIGA event provided valuable information and insight into how other agencies translate data creatively. It also revealed that we all share a key philosophy: focus on visually dynamic ways to let your numbers tell stories — substantiating your brand and giving power to your offering.

This post was co-authored by Eric Pier and Steve Kim

Let’s look at why.

Focus – Polly has aimed the firm squarely at Financial and Professional services. Along the way this also means gaining expertise in many of the services provided to these industries in technology, middle and back office and services. This focus has yielded a knowledge bank and expertise not to be found elsewhere and insights that have benefited a multitude of clients around the world.

Focus – Polly has also made clear what the firm does for its clients, story telling in many formats. While most agencies focus on design, Polly has balanced design with strategy and editorial. She has two great senior editors and a stable of freelance writers that are truly known for their expertise, writing style and research. Strategy is a staple, and clients have come to expect great thinking and targeting along with creative.

Focus – Polly makes sure that the outcome each client is seeking is achieved. This often takes an investment in research. Not every client wants the time and expense of research (which can take many forms and levels of depth) but this focus, helps ensure outcomes that meet or surpass client expectations and have positive outcomes for our client companies. After all, the bottom line is results.

Focus – Polly doesn’t just like great creative (writing and design) — she demands it. Occasionally (don’t be too shocked) clients are junior or not as deeply involved in our focused industries as Carpenter Group. The firm protects and nurtures these clients creating paths, to real success for them.

Culture – Polly likes to develop people. There is so little turnover of personnel at the firm that institutional learning of processes and client preferences are peak. The culture is massaged and nurtured one person at a time, by discipline and as an overall team. This creates an environment of client focus, expectations of excellence and a partnership between strategy, editorial and design with one clear goal — client success.

Humility – Polly will blush when she reads this post. She is no bragger and we push her and the firm to increase its self-promotion based on the work, the results and client satisfaction. These three pillars keep clients coming back and taking the firm with them wherever their career brings them.

Through our client’s voices, now joined by some of our own in social media and interactions across the industries we serve, the firm’s reputation continues to grow. Looking forward, I see more of the same; great work, happy clients and long relationships. It is what has been built and what Polly continues to foster.

We all look forward to the next 31 years in anticipation of changes in the industry, the technologies we use, with our sites clearly fixed on the prize our founder has clearly set; client results.

A recent article on TheFinancialBrand.com challenged marketers to contribute ideas on keeping creativity alive in financial marketing. We’re pretty familiar with the topic, so here’s an excerpt of our response. It just may spark some creativity in your office as well!

One of the most common ways companies attempt to generate innovative ideas is by brainstorming. Yes, I can see you rolling your eyes now. We’ve all suffered through painful brainstorming sessions that yield neither creative ideas nor the cheerful sense of goodwill they promise (“Remember, there are no bad ideas!”). But when done right, brainstorming can spark better creative ideas that solve real business problems.

We’ve led a lot of successful brainstorming sessions, and although tactics may vary from client to client, here are important ideas everyone should keep in mind:

• Understand how to collaborate effectively. Obvious? Maybe. But think about how complicated the dynamics are in organizations. In our last blog post, we discussed how company culture impacts collaboration. Is your organization balanced? Does every person work toward a common goal? What is the role of ego? Consider these questions before launching your next ideation session.
• Incorporate real structure. All too often, brainstorming consists of a room full of people yelling “out of the box” ideas. However, these unstructured free-for-alls rarely result in solid, actionable solutions. A recent article from McKinsey Quarterly discusses how to approach brainstorming more purposefully so you can generate better ideas – and boost odds that your company will act on them. For example, the article talks about knowing your organization’s decision-making criteria, learning to divide and conquer, and following-up quickly. Also, simple things like setting a clear agenda in advance, prepping participants with any pre-reading and stating goals at the onset will help make the session much more productive.
• Challenge ingrained perceptions. Many of these tactics are relatively simple. One way is to try to solve problems by using analogies from leading brands outside of your industry (e.g., “How would Apple create our customer experience?”). Another way is to create artificial constraints that force creative solutions (e.g., “What if our largest distribution channel disappeared?”). Most of all, try to uncover and challenge core beliefs about the way your company (or, better yet, your entire industry) operates. This often generates ideas that are not only creative, but also truly differentiating.

Whether you’re building a brand or launching a sales campaign, these brainstorming tips will help you find ideas that can differentiate your firm or product in your customers’ minds.

In her widely discussed January 15 New York Times opinion piece, “The Rise of the New Groupthink,” Susan Cain champions the introvert, and reveals the need for workplaces, schools and other organizations to foster solitude. “Solitude is out of fashion,” Cain states. “Most of us work in teams, in offices without walls, for managers who prize people skills above all. Lone geniuses are out. Collaboration is in.” She continues, “But there’s a problem with this view. Research strongly suggests that people are more creative when they enjoy privacy and the freedom from interruption.”

Her article goes on to discuss how collaboration — and all the associated meetings, brainstorming sessions, and team interactions — may actually limit talented individuals and prevent them from generating truly innovative ideas. “Decades of research show that individuals almost always perform better than groups in both quality and quantity, and group performance gets worse as group size increases.” In particular, she calls out brainstorming sessions: “The reasons brainstorming fails are instructive for other forms of group work, too. People in groups tend to sit back and let others do the work; they instinctively mimic others’ opinions and lose sight of their own; and often succumb to peer pressure.”

No person, no matter how brilliant, is an island.

Is there truth to this? Absolutely. Most of us know from experience that forced collaboration among too large and wide a group can be unproductive, disruptive and sometimes downright painful. And creative thinkers — spanning a range of personality types — all require some level of privacy and interruption-free time to develop and work through ideas.

However, teamwork and collaboration may be getting a bad rap. Even the most brilliant individuals are limited by the sum of their experience and knowledge. They need the varied viewpoints and experiences of others to evolve their ideas.

Tightly knit creative teams have the advantage of cross-referencing and leveraging their combined knowledge and talents to produce results. And larger groups, when successfully executed, leverage and exploit collective knowledge and experience to not only generate ideas, but also quickly improve upon them. Wikipedia and Quirky are examples of successful group innovation.

It’s all about your culture.

So, what does this all mean for those of us for whom creativity and innovation are our competitive edge? First and foremost, you have to carefully consider your organization’s culture. Here are a few points we should all think about:

• Is our organization balanced? Are team members’ days packed with meetings, or is there time set in which each person can think through issues. On the flip side, is there active effort made to ensure all employees are able to share ideas, provide feedback, and get needed support and perspective?

• Does every person work toward a common goal? Does each person know what the organization is working toward? Do they take pride in it, and see the benefit of pushing beyond just their individual part?

• What’s the role of ego? Ego is that sense of “I” or “me” that separates, judges, competes, dominates and seeks approval. This attitude creates a closed, defensive, exclusionary, resistant and intolerant culture that can dampen creativity and innovation.

• Are team members comfortable with one another? Is your team actually, well… a team? Individuals who feel comfortable with one another can think freely and speak more openly. But if a person is reluctant to add ideas to the mix for fear of being shot down or criticized, eventually they’ll simply shut down and let someone else do the thinking.

So here’s what it boils down to: When done wrong, collaboration can be the New Groupthink. But when done right, it can be a differentiating advantage that drives an organization forward.

By the way… This Carpenter Thinks post was a successful creative collaboration between Amy and Cathy!

Hearing of Stephen Hawking’s upcoming 7Oth birthday got me thinking about time once again. While he explores the expansion of the universe and bends time as only a physics theorist can, time to mere mortals is a thing that drives us nuts.

It was no sooner than December 26th, but distressing nonetheless, that stores began to switch themes from Christmas to Valentine’s day. As if time wasn’t whizzing by enough, it is almost impossible to avoid this holiday front running. Forget about savoring any moment, or bending good times into a memory.  The retail calendar is now compressed to five “seasons” that have little to do with Mother Nature. We have Christmas, Valentine’s, Easter, Independence, Halloween and again Christmas. Each, as it passes, becomes instantaneously disposable, discounted, dead, over and done with.

And so we stress, “we haven’t got time.”  I believe it is because the time between these “seasons,” the dark matter of life—the regular everyday day —has gone into a black hole.

C. Wonder (the concept store by Tory Burch’s ex-husband, Christopher Burch, a venture capitalist who helped found her company) recently opened their flagship store in our building at 72 Spring Street. There was so much hype, I had to take a peek.

The experience really was wondrous the first time I walked through the 20+ foot green doors into the highly designed environment. I was overwhelmed with desire for the variety of products displayed so intentionally throughout the store. I wandered in wonderment, envisioning myself carrying a C. Wonder tote or jangling 10 bangles on my wrist (one just isn’t enough). I could imagine snuggling under a monogrammed cashmere throw with my dog in his wonderfully preppy striped collar. I could see the wonder (no pun intended) on my neighbor’s faces as I rode down the street on my new aqua bicycle with matching helmet.

I was wonderstruck by the unique items offered. But, the more I looked around the store the more I realized that the individual items were not, in fact, so unique. I had seen most of them or like items elsewhere. The BIG difference at C. Wonder was the overall brand experience that had been so deliberately created. It is a perfectly executed experience, from the playful logo, advertising and graphics, to the chic interiors, to the selection and combination of products they sell, to the innovative mobile check out. It made me want C. Wonder stuff — not just any stuff!

In this world of similar offerings around every corner, a truly branded experience can really make the difference. Oh and by the way, my dog looks wonderful in his new collar!

Whether your budgetary pockets are deep or shallow compared to last year, there are plenty of ways to get smarter about your resources, and optimize them to increase your efficiency and achieve better results.

From our more than 30 years of strategic communications experience, there are five things we’ve found ourselves discussing with our clients again and again.

Okay, so these won’t sound groundbreaking, but they’ve helped frame thought processes to move the needle forward. We are sure that if you put them into fresh context, you’ll find they help you leverage the budget to strengthen your brand and acquire new clients.

Here they are:

1. Ready, Aim, Create

First, focus on the “ready” and “aim” portion of your efforts. What is the strategy? Does this project move the business forward or are there higher priorities to tackle first? How will we measure success?   Is the creative concept compelling, on-brand and will it resonate with your audience? Before creating anything, go back to the basics of asking all of the right questions.

2. Take a holistic view.

It’s just like nutrition: Both deficiencies and excesses can impact your health. If you look at your communications as a whole, you may find gaps or overlaps that mean you’re wasting resources, or worse, losing revenue opportunities.

Be critical. Instead of that massive general capabilities piece that says — and tries to do — too much, would a series of shorter Web pages or other pieces be better?  Would these items be more effective in targeting a particular customer segment, or serving a specific touch point throughout the sales process?

We ran into this in the past year with a major banking client, who found they were discarding hundreds of thousands of dollars in printed pieces. We started with a communications audit to see how all their marketing materials dovetailed with their business plan. Then, we mapped out the decision-making process of their customers against the selling process of their sales force.

Once we did this, we were able to design personalized direct mailers that drove potential clients to PURLs (personal Web pages), enabling our client to track and measure success, and generate leads for the sales force.

3. Test how well you know your audience.

The way your target audiences make buying decisions is quantifiable. Every once in a while it pays to make sure that what you think you know about your customers is still valid. Demographics can change. And purchasing psychology is always dynamic, changing with trends and events that influence sentiment.

Beyond surveys and focus groups that produce results from self-selected groups, listening software and analytics can uncover impressive insights into customer and trends into purchasing consideration and sales. Also, it’s important to realize that off-the-shelf methodology rarely works, but well-thought-out monitors supported by strong analytics are able to guide new sales paths, products and communications.

4. Integrate messages across materials, audiences and time.

In an integrated marketing system, each channel of communication supports all the others.  That means every message and item should communicate your brand attributes and core positioning, helping you acquire clients and build your brand.

We recommended a single positioning and umbrella messaging strategy for one of our international clients that was facing slowing growth and an evolving brand. This involved thinking about which long-term messages would be most useful, build the brand and help them acquire new clients. All subsequent communications were integrated beneath this umbrella, and this enabled them to create a brand with staying power while acquiring new clients.

5. Listen to your sales force.

Marketing managers who maintain an ongoing dialogue with their sales force have their finger on the pulse of their markets, and have a higher probability to anticipate the outcome of their strategies. After all, sales professionals are closest to their clients and prospects. They know the buzz on the street and where it’s emanating from. Ask them  which tools in your communications inventory they’re using, which they’re not — and why.

Optimizing your marketing is an intellectual and creative challenge. By following these guidelines, you can make your marketing more effective and optimize your budget.

Ultimately, you’ll have greater success in securing new clients and building your brand.

The More Things Change…

Our founder's father, Joe Carpenter, created this illustration in the 80's. It holds up well.

I have had the privilege over the years to work with some great economists. Because each has a different worldview, speaking to several of them in the same week could lead to confusion. But one thing they had in common were their references to the “wall of worry,” and its link to the launch of bull markets.

What does that mean? It’s that it seems we have to build a wall of worry before capitulation becomes the catalyst for the markets to return to an upward climb.

Protesters in the streets, global unrest, politicians running wild, out of control energy prices, stagflation, inflation — who knows what’s next. The illustration in this blog brings to life the wall of worry. The irony of this work is that everything written in this post was true back in the 1980s when our founder Polly Carpenter’s father created this work of art.

The more things appear to change, the more we can learn from history. While known as a tax cutter, the Reagan administration also raised taxes and interest rates, killing off inflation. That led to 20 years of prosperity. Well, at least that’s what the economists teach.

We await our next chapter in 2012.