Before I moved to Panama, I worked at Fisher Investments. Yes, Ken Fisher, the guy you see on CNBC promoting his asset management company. Fisher took a traditional service, money management, and built a completely new business model around it. Along the way, he became a billionaire.
Ken Fisher is the son of Phil Fisher. Phil Fisher wrote, Common Stocks and Uncommon Profits and is touted by Warren Buffett and Charlie Munger as their other main influence, after Ben Graham.
Ken is well-known in his own right. He invented the Price-to-Sales ratio in the 1980s. Back then he used it to identify fast-growing, small-cap stocks, that were yet unprofitable or whose wild swings in profitability would make the more typical Price-to-Earnings ratio inefficient. Price to Sales became all the rage again over the last 15 years as low-interest rates allowed never-ending funding to unprofitable tech companies, which were in turn valued on their sales.
When I was at Fisher Investments, they managed about $40b and that number has now climbed above $200b. Want to know the secret of how Ken Fisher built this monster? He is not the greatest money manager, his returns were not well above average, yet he accumulated a ton of assets and became a billionaire along the way.
So how did he do it?
Ken was the first private asset manager to mass-market asset services to high-net-worth individuals. The account minimum used to be $1,000,000 at Fisher. It was assumed, that to target a client with $1m+ in liquid assets, you needed to meet him personally. Wine and dine him. Schmooze him. These relationships were generally built locally, in person.
Ken started direct mailing high-net-worth individuals. He had an entire department focused on putting out different “junk mail” packets for this target. The packets were not your typical fare, they were informative brochures on why not to buy an annuity and instead to go with Fisher for example, or the Top 10 mistakes when planning for retirement.
Eventually, Ken moved from junk mail to banner ads, then from banner ads to TV spots.
Fisher took a very old business, asset management for high-net-worth individuals, and completely changed the way it was marketed. He also built processes around that marketing. He hired local sales reps who would meet in person with an interested prospect. Once the account was open, the relationship would pass to an account executive sitting in an office in California. The entire relationship would be handled via phone and email. He created a system where it was very difficult for someone to leave the firm and take their client roster with them.
Ken Fisher found success by taking a very old service, money management, and building a completely new business model around it.