Bond insurers want to reach the next generation of investors

The average municipal bond investor was 61 years old in 2019. BAM Mutual has a new ad campaign trying to bring that number down by meeting younger people where they are, on channels like Instagram and YouTube. 

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Tens of thousands of people have seen the ads on their social media feeds, and many of them have clicked on them, said Michael Stanton, BAM’s head of strategy and communication. 

The campaign is part of an industry-wide push to introduce munis to younger high-net-worth individuals and financial advisors. 

The ad campaign touts BAM’s bonds as “built for enduring strength.” They direct viewers to a website with more information on BAM’s bonds and on munis in general. The site hosts interviews with BAM CEO Seán W. McCarthy and Co-Head of Public Finance Juliet Stiehl. 

In the first week of the campaign, around 23,000 people watched the video ads on YouTube, Instagram or LinkedIn, according to Stanton. Daily traffic to BAM’s website more than doubled.

“Those visitors are more engaged than the typical site user,” Stanton said. “We’re seeing them access multiple pages and spend more time on the site, which is exactly what you’d expect for people who are learning more about the market.” 

The videos replicate the firm’s regular meetings with larger asset managers. BAM usually brings its CEO or CFO to talk to a room of 40 or 50 financial advisors. The materials on BAM’s website allow individual investors and financial advisors to see the type of information those FA firms receive from the same decision-makers.

In developing the videos, BAM’s team could draw upon experience with individual investors. 

Periodically, an investor planning to add to their small bond portfolio will call BAM to verify that the company actually insured a deal. Those calls get routed to investor relations head Don Farrell, he said. Once he confirms that BAM does in fact insure the bonds in question, the investor will ask how the firm got comfortable with the investment. 

“I’ll walk through how we got comfortable with it, and then I’ll point them to our website where we have these credit profiles,” Farrell said. 

Assured’s advertising has focused on younger investors since 2022, when it launched its still-active Hammock ad, according to Robert Tucker, Assured’s head of investor relations and communications. 

The ad sends the message that “although retirement may be years away, investing in and protecting municipal bond investments matters today,” Tucker said. The ads also highlight Assured’s insurance of environmentally related infrastructure, which studies have shown is of higher importance to younger investors, he noted. 

Assured has placed these ads on social media, search engines, streaming platforms, and TV and radio, including channels where approximately half the visitors are ages 24-45, Tucker said. The ads are also on financial media — readers may recognize them from The Bond Buyer’s own site. 

“We also engage younger investors as they move through different life stages and their investment needs evolve, reaching them on platforms such as Peacock, Samsung, Paramount, Tubi, HBO and NBC,” Tucker said. 

BAM’s efforts don’t just benefit the insured bond market, Farrell said. 

“We want the investors to be aware of the municipal bond market. The more investors there are, obviously, the more liquid the market is, and it benefits the issuers who are on the BAM-insured bonds,” Farrell said. This is especially important given the “staggering” projections for volume over the next decade, he said. 

When prospective new investors hear about the benefits of municipal investing, Stanton said, they often want in on the opportunity — especially with the tax-equivalent yields in the current market.

“They understand the math,” Stanton said. “So when it’s presented to them, they’re embracing it. It’s just making sure those conversations are happening.”

However, the nature of municipal bonds places a kind of floor on the investors it can appeal to, Farrell said. People in their 20s generally don’t have enough income or wealth for munis to be an advantage. 

“The average age of the municipal bond investor is 60 years old or 61 years old. I think we can get that average lower, just as these people become more aware of muni bonds,” Farrell said. 

BAM will continue to roll out investor materials on its site through the end of the quarter, but its efforts to reach younger investors won’t end there, Stanton said.

“We have some ideas,” Stanton said. “Stay tuned.”