Strategy

GUEST OPINION: The JOBS Act: What Hedge Fund Managers Should Do And How They Should Go About It

April Rudin - The Rudin Group, 15 November 2013

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Registered financial institutions can now legally market their investments - but few are jumping on the opportunity, says April Rudin, chief executive and founder, The Rudin Group.

Editor’s
note: In July the US Securities and Exchange Commission lifted an
80-year-old ban on general solicitation or general advertising for certain
private securities offerings. Abolishing the ban was required under the 2012 Jumpstart Our Business
Startups Act, established to help startups and small business with
regard to financing regulations. Registered financial institutions can now legally
market their investments - but few are jumping on the opportunity, says April Rudin, chief executive and founder, The Rudin Group.

The
Rudin Group is a professional services firm that specializes in building
integrated marketing, branding and communications strategies for the financial
services and wealth management industries.

The “Twilight Zone” period between President
Obama signing the JOBS Act and the SEC moving to enact it has apparently lulled
many hedge fund managers into a deep sleep. Even now that there is much clearer
direction and a time frame, many managers are still dozing.

If you snooze, you lose; that’s obvious. In
any business there are advantages to being an “early mover”, but never before
has a full veil of prevention been lifted so decisively and en masse.

The key is figuring out not if to move
forward, but how. Now that funds can choose from a variety of
marketing/advertising platforms, how best to create a budget, allocate
resources toward the best return on investment, and create messaging that will
inform and educate potential investors enough to engage them to visit your
website and make an inquiry. How do you close this “warm lead” when you are in
front of them?  What if they are
Baby Boomers? Or Gen-X/Gen-Y?  How
must your message change to reach each of these potential new investor
demographics?

As a result of the JOBS Act, hedge funds
will be allowed to advertise their products through the mass market. In magazines,
newspapers, radio, online and certainly through digital and social media
channels, come this fall hedge funds will be able to promote themselves in ways
they were never before allowed. But whether they know how to “act” with regard
to the JOBS Act is another question.

The problem is this: the hedge fund
industry isn’t even close to being prepared for it. The many hedge fund
managers and hedge fund marketing people I encounter are at best frozen and
unsure of what they can do, what they should do, and how they are going to
proceed with doing it.

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