Marketing of financial investment products amidst financial industry crises: A marketer’s perspective

Financial sector reforms have been an integral part of the country’s financial setup. Just as in other countries, these reforms are geared towards enhancing financial sector performance and improving the efficiency and effectiveness of the entire financial system.

Financial sector reforms in Ghana date as far back as the 1980s. Until the recent reforms, the country had witnessed two major financial sector reforms: the Financial Sector Adjustment Program (FINSAP) instituted between 1988 and 2000 and the Financial Sector Strategic Plan (FINSSP) which was a home-grown policy implemented between 2001 and 2008.

Overall, the banking sector reforms of January 2019 are by far the ‘severest’ to have hit the financial sector of Ghana since independence. This description is apt considering the fact that the exercise was responsible for the revocation of the licenses of 9 commercial banks (Unibank, Sovereign, Beige, Royal, Construction, UT, Capital, Heritage, and Premium Bank).

Following the revocation of these licenses, The BoG equally revoked the licenses of 23 Savings and Loans and 346 insolvent microfinance institutions within the same year (See BoG Press Briefing, 2019).

The non-bank financial service sector equally had its own share of reforms. The most pronounced appears to be that carried out by the Security and Exchange Commission (SEC) amongst fund management firms. These reforms by SEC similarly led to the revocation of the licenses of 53 fund management firms.

The media sensationalism (stemming from the earlier revocation of the licenses of 9 commercial banks) that characterized the reforms culminated in panic withdrawals at microfinance and savings and loans institutions even before they had their own share of the cleanup.

To date, even though BoG figures point to an efficient banking sector as a result of the reforms, it is equally undisputable that microfinance, saving and loans, and fund management firms have been badly bruised by the ripple effect of the reforms.

There are still a significant number of microfinance and Savings and Loans institutions that remain insolvent as a result of the exercise. In equal measure, most fund managers who invested depositors' funds with these BoG institutions are still battling for their lives. Amidst these unfortunate happenings, the overarching question, therefore, is: how do fund management firms carry out the business of marketing their investment products amidst the current financial industry crises?

Apart from the daunting task of carrying out marketing activities in these critical times, fund management firms are equally faced with the responsibility of recovering locked-up funds and building trust amongst clients. The latter appears the most challenging of the three tasks.

The panacea however is to ensure transparency and carry affected clients along in every step of the fund recovery process. By way of ensuring transparency, the cause of the problem should be communicated to affected clients in understandable language. As much as possible affected clients should be notified of the specific steps being taken toward fund recovery.

Additionally, whiles pursuing locked-up funds and building trust, the firm must also put in place strategies to continue the critical task of marketing the firm’s products. An important part of the firm’s communication in these times should be messages aimed at addressing measures the firm has put in place to safeguard client funds and prevent similar occurrences in the future.

Again, whiles formulating strategies to mobilize funds, it is important to underscore the fact that the La Palm Loyal Beach directive of June 2018 by the SEC marked a major shift in the operations of Fund Management firms. Unlike previously where the trump card of the fund manager was promising high rates (guaranteeing high returns), the La Palm directive disarmed fund managers of this weapon.

It now lies on the fund manager to come up with attractive products and provide superior customer services aimed at staying on top of the competition.

Investor confidence in the financial sector is at a record low. The drivers of this insanity have been a cocktail of issues (as described in the preliminary section of this article) that have impacted negatively on the confidence level of the Ghanaian. The biggest test for the marketer is to work towards restoring the confidence and trust of the investor.