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As mutual funds enter the world of mass marketing, they confront issues more familiar to consumer-goods makers than money managers. By Laura Walbert
It wasn't exactly in Stanley Egener's job description. The president of Neuberger & Berman Management stood next to a gold Aston Martin prepared to negotiate a stretch of California's winding, mountainous Pacific Coast Highway. "I just want to warn you about one thing," the car's owner advised him. "When you get up to about 150 miles per hour, you're going to find the nose will lift up a bit, and you'll want to be a little careful."
Egener survived the ride - at considerably less than 150 miles per hour, His little seaside spin was filmed for Neuberger & Berman's new television advertising campaign, part of a total ad budget estimated at $4 million to $6 million. In the spot, a younger driver in a red Ferrari wheels up alongside the middle-aged Egener and challenges him to race. The Ferrari then peels off and crashes. The commercial message: Although it can be tempting to rush ahead when you think you've got a hot investment, Neuberger & Berman always takes a considered approach and evaluates the risks.
Egener's experience may be a bit extreme, but it does point up the new reality that mutual funds are increasingly being sold like cars, toothpaste or any other consumer product. Traditionally, the industry limited its advertising efforts to readers of the business and sports pages or personal-finance magazines. But 40 percent of last year's fund advertising dollars went to TV commercials, often aired on sitcoms, that highlighted only the fund family name and featured more music than sober discussion of risk and reward. "Nobody is going to achieve McDonald's or Coca-Cola status in the fund business, but the strategy is not unlike that," says Burton Greenwald, a Philadelphia-based financial services consultant.
The new ad blitz has boosted fund TV spending fourfold, from $35 million in 1995 to $140 million in 1996, according to New York City-based Competitrack, which keeps statistics on ad spending. Kenneth Hoffman, president and managing director of the Optima Group, a financial services consulting firm based in Fairfield, Connecticut, expects 1997's...