Have large financial companies secretly circumvented government regulations designed to safeguard vulnerable investors from bad decision-making?<\/p>\n
Most likely, says marketing professor Debanjan Mitra. He and his colleagues discovered that multi-faceted financial companies that employ \u2018umbrella branding\u2019 may have been using advertising to indirectly drive customers to all of their product portfolios. Until recently, advertising on behalf of hedge funds was prohibited.<\/p>\n
Mitra\u2019s research, titled \u201cCan Brands Circumvent Marketing Regulations? Exploiting Umbrella Branding in Financial Markets\u201d is forthcoming in Marketing Science.<\/em><\/p>\n Mitra is a professor of marketing and the Voya Financial Chair at UConn. His co-authors include professors David Musto of the Wharton School at the University of Pennsylvania, Sugata Ray of the University of Alabama, and Yan Lu from the University of Central Florida.<\/p>\n \u201cIf one category has restraints, whether they are regulatory or financial, the parent company can \u2018fill in\u2019 demand for the brand,\u201d Mitra says. \u201cWe found that a parent brand is a vehicle for transferring information from one industry segment to another.\u201d<\/p>\n He says the study supports what many researchers previously suspected, but couldn’t verify, about how umbrella branding can be used to circumvent restrictions.<\/p>\n \u201cThis shows the power of marketing. It happens in subtle ways, even to very sophisticated customers like financial investors,\u201d he says. \u201cAfter all, we\u2019re talking about investment decisions that have a significant impact on a family\u2019s financial well-being. We\u2019re not talking about shampoo.\u201d<\/p>\n JOBS Act Offered Rare Opportunity<\/strong><\/p>\n Until seven years ago, certain financial offerings, including hedge funds, were strictly regulated with regard to advertising and promotion. The Securities Act of 1933 imposed a blanket ban on general solicitation, including promotion, adverting, and contacting potential customers, for all securities not registered with the Securities Exchange Commission (SEC). While hedge funds were banned from advertising, mutual funds could advertise because they are SEC-regulated. The researchers wanted to know if \u2018umbrella branded\u2019 companies could advertise their company in a broader context and reap ‘spillover’ benefits to aid their hedge funds.<\/p>\n Their research opportunity emerged with the enactment of the Jumpstart Our Business Startups Act (JOBS) in 2012, which lifted restrictions on hedge-fund advertising. It provided a natural research experiment, says Mitra. He and his colleagues were able to collect data from asset management companies with hedge funds to see if the JOBS Act led to a dramatic increase in advertising.<\/p>\n Following extensive research, Mitra and his colleagues found that hedge funds\u2019 poor circumstances, like lower fund inflow or poorer returns, are associated with increased advertising by their sibling mutual funds (i.e., those that share a common brand name). More important, they discovered this effect abruptly diminished after the JOBS Act, which allowed hedge funds to advertise on their own. This indicates asset management firms may have exploited umbrella branding to circumvent marketing restrictions on their hedge funds.<\/p>\n These findings will be of interest to policymakers and regulators, who can assess whether such restrictions have unintended consequences, such as giving undue advantage to umbrella brand firms over those that stand alone.<\/p>\n Broader Implications\u00a0 <\/strong><\/p>\n While the researchers focused on the financial industry, their discoveries also have implications for other businesses. For instance, could a firm use its umbrella branding power to promote a less regulated product (say, baby food) so as to encourage the sale of a more regulated product (say, children\u2019s life insurance)? More broadly, when and how do firms wield this brand power?<\/p>\n The researchers are already exploring these new avenues of corporate advertising research, based on their findings.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" A UConn marketing professor found that financial companies employing \u2018umbrella branding\u2019 may have used advertising to drive customers to all their products, despite regulations designed to safeguard investors.<\/p>\n","protected":false},"author":121,"featured_media":148527,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_crdt_document":"","wds_primary_category":0,"wds_primary_series":0,"wds_primary_attribution":0,"footnotes":""},"categories":[2076,1862,2225],"tags":[],"magazine-issues":[],"coauthors":[2105],"class_list":["post-147498","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-research","category-busn","category-uconn-storrs"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"publishpress_future_action":{"enabled":false,"date":"2026-05-25 06:19:15","action":"change-status","newStatus":"draft","terms":[],"taxonomy":"category","extraData":[]},"publishpress_future_workflow_manual_trigger":{"enabledWorkflows":[]},"_links":{"self":[{"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/posts\/147498","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/users\/121"}],"replies":[{"embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/comments?post=147498"}],"version-history":[{"count":3,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/posts\/147498\/revisions"}],"predecessor-version":[{"id":148526,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/posts\/147498\/revisions\/148526"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/media\/148527"}],"wp:attachment":[{"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/media?parent=147498"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/categories?post=147498"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/tags?post=147498"},{"taxonomy":"magazine-issue","embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/magazine-issues?post=147498"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/today.uconn.edu\/wp-rest\/wp\/v2\/coauthors?post=147498"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}