FundFire: How can managers boost client confidence?

FundFire "YourQ&A" published on Sep 25, 2009

Question: "What are effective measures that institutional managers can take in the near-term to build up client confidence levels?" Investment Professional, Boutique Firm, New England

Answer: Dan Sondhelm is a partner and v.p. at financial services marketing firm SunStar.

Providing a sense of stability and control in the midst of uncertain market is the most effective way to quell concern. Communication during these times needs to be regular, frequent and event-driven. We find clients want to hear about a manager’s proactive approach to meeting challenges head-on with a sound, well thought-out strategy.

Clients want to know that the manager they hired is adhering to its discipline through the bad times as well as the good. This confirms that their hiring decision was a smart one, which naturally results in client confidence.

Recently, I spoke with the co-portfolio managers of an all-cap equity strategy boutique firm serving the institutional market. Each manager described the firm’s strategy in different terms. One referred to the firm as a growth manager looking for stocks at reasonable prices. The other said they were value managers looking for momentum.

We all agreed it couldn’t be both, yet each of them felt strongly. The ensuing discussion, which lasted most of the day, ended in agreement. They articulated that they actually employed three distinct strategies: one for fast-growing companies, one for mispriced stocks, and a third for small-cap, entrepreneurial companies that have the opportunity for homeruns.

This exercise ensured that their firm's messages to clients going forward would be consistent and thorough, not a mixed message that adds to confusion and a sense of unease.

We’ve also seen customer-sensitive managers increasing their visibility with clients and consultants, whether through direct communication, presence in the media or both. Portfolio managers are the best representatives to speak to clients and they can inspire confidence. From time to time, we’ve heard objections to showcasing portfolio managers for a variety of reasons, but we find that when the expectations are clear, there is no substitute for the strong message the portfolio manager can deliver about the firm’s approach.