Fund managers keen to cash in on the cult of celebrity are being warned high-profile, pricey marketing campaigns in today's tough economic times could lose them more business than they win.

Soccer manager Jose Mourinho recently joined the roster of Hollywood stars and sporting legends hired by banks and insurers to promote their brands, signing up last month to represent funds firm Henderson Group .

Against the backdrop of industry job cuts, sluggish business and flatlining fund fees however, this kind of spending may backfire, say financial advisors and corporate governance groups.

The use of celebrities can be damaging as well as helpful especially as the link between celebrity and company can be tenuous to say the least, said Tom Biggar, investment manager at TQInvest.

It may become a hindrance as clients express interest in products that are completely inappropriate for them.

Henderson's campaign is designed to project unity and strength after two recent buyouts. But spending vast sums on marketing that may be more geared to boosting internal morale than luring new clients could alienate cost-conscious investors expecting to see far more bang for their buck.

Henderson recently reported retail investors, spooked by the Euro crisis, withdrew 692 million pounds more from their funds than they put in during the three months to September 30.

You can understand why Henderson would like the public to equate the firm with Mourinho - 'the special one' - and his endorsement may be quite compelling if Mourinho limits the number of companies he pitches, Simon Wong, a partner in active investment firm Governance for Owners said.

Whether the Mourinho deal is justifiable depends on, among other things, the amount paid to him and the expected payback measured in terms of increased name recognition of the firm, reputational impact and success in growing revenues from the targeted segments, he said.

Mourinho signed up as the new face of Braun's Series 7 electric razors in September and has also fronted financial sector campaigns for American Express and more recently Portugal's Millennium Bank, in which he urged fellow countrymen to be proud of their country despite its economic difficulties.

Richard Wilson, Henderson sales & marketing director, said his company was delighted with its excellent value arrangement with the Real Madrid coach but conceded it would be tough to pinpoint how much new cash he could help Henderson bring in.

It's clear Henderson has been through a period of change and is now rallying around the idea of having a common objective, Wilson said.

Pete Davis, founder of Getmemedia.com, a search service for marketing ideas, who in the past managed sponsorships at Swiss foods group Nestle, estimates endorsement by a well known personality could be worth about 1-2 million pounds to the individual.

By comparison, sponsorship of a Formula 1 racing team could cost around 25 million pounds.

British insurer Aviva ruffled feathers among its investors with its 10 million pound celebrity-backed rebranding of unit Norwich Union in 2009, at a time when the reputation of financial services firms was languishing in the doldrums.

Some shareholders used the forum of that year's annual general meeting to accuse Aviva of overspending on the campaign, which featured actor Bruce Willis and supermodel Elle Macpherson, but Chief Marketing Officer Amanda Mackenzie said time has underlined just how effective the tactic was.

Our television advertisements, featuring famous people who had all changed their names, showed how this had helped them achieve a change in fame and fortune. Using celebrities is a proven way of gaining high impact fast, so you ultimately spend less on media buying, Mackenzie said.

Media costs were also lower at the time we rebranded due to the economic downturn and we benefited from billboard advertising staying up beyond the period we'd paid for.

Davis suggested the financial crisis may have driven the cost of celebrity endorsement for fund managers and banks higher because of caution on the part of the stars about being associated with institutions seen by the public as villains.

Quite often now... celebrities will turn things down because they don't think the fit is right or they don't think the brand is moral enough. They don't necessarily need the money at the top level, so they can pick and choose, said Getmemedia.com's Davis.

Although the campaigns are likely to generate a spike in interest in financial services firms in the short term, advisors said they seldom lead directly to a product sale, particularly with so many other factors influencing fund selection.

I can honestly say that this should have absolutely no impact upon an advisor's decision when recommending suitable investments to clients, and any suggestion otherwise is incorrect, TQInvest's Biggar said.

(Editing by Sophie Walker)

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