Strengthening your message for sophisticated audiences

Roland Meerdter

Roland Meerdter of Propinquity Advisors, at our recent client conference, shared his guidance on how to make an asset manager's story attractive to sophisticated audiences based on his own experience of many years conducting due diligence at Duetsche Bank.

"There's a new normal -- the industry has evolved in a relatively short time to understanding and expecting authentic, detailed information," he suggested. "And, your message to a sophisticated investor must be compelling not only during the initial sale, but also in retaining them over the years."  While that message needs to be bite-sized bullet points for an unsophisticated retail investor, you also must be able to effectively layer it up as you reach out to advisors, institutions and their consultants. The overriding message must be consistent at all times: on your website, in your literature, as you appear in the media and in your answers to due diligence questionnaires. It may vary in how deep it goes, but in the end, it must be woven in a way that is recognizable over time no matter by whom or how it is delivered.

Meerdter recommended a set of best practices in addressing the sophisticated investor, whom he defines as someone who conducts his/her own due diligence and compares you to your competitors. Bear in mind, he cautions, "the sophisticated investor already knows they want your asset class, that's why you're invited to the table. Also recognize that you've most likely already paid the price of admission -- good performance." So, if he is suggesting not to "sell" your asset class or your performance -- or at least not focus on those as your main points -- then how should you craft your presentation?

FOCUS ON YOUR FIRM, NOT YOUR ASSET CLASS

The sophisticated investor knows you've got good performance. Consultants have already seen your performance and can or perhaps already did slice and dice it every way to Tuesday. Therefore, focus on HOW you did what you did. Don't talk about just what you did, rather, focus on explaining how it happened by sharing attribution analysis and process. Show that you truly understand what caused the portfolio to perform the way it did, how that was by design and how your process is repeatable. Know that consultants like to draw their own conclusions.

MANAGE EXPECTATIONS

Meerdter shared his take on the best presentation he ever heard from a manager who came in with stellar performance. The manager said "this is not going to last, but we are smart. We will do a good job for you over a full market cycle and we'll help you get where you need to be." This puts you and the consultant on the same side of the table and in periods where you might underperform, there's the understanding this was part of the deal, assuming you've stayed true to your process.

A GREAT PITCH

For a great pitch, Meerdter recommends that "you need to understand the consultant's perspective. Get a handle on the politics involved and potential limitations. And, know the competitive environment." More than anything else, consultants need to know if all other things are equal, how is your firm different?

Here are eight points Meerdter feels weave a great story -- and if any don't ring true of your firm, perhaps it’s an area in which you need to invest:

Showcase your:

1.    experience, pedigree, depth of personnel, stability and tenure

2.    access to key resources for research, travel to companies you invest in, etc.

3.    clearly defined and consistent process and philosophy

4.    what differentiates you, how it is solid, proven and repeatable over time

5.    robust risk control policies and how you define and measure risk for your portfolio

6.    demonstrated ability to deliver superior risk-adjusted performance over varied market conditions

7.    reputation of your organization, show that investment management is your priority 

8.    consistent client service and communications, providing ongoing conversation

YES IS BEST, BUT NO IS GOOD

When the meeting is over, follow up is important. While you certainly want the prospect to give you a "yes," letting you know you are not a good fit, or not a good fit now, is preferable to leaving you hanging. In those in between times, the best follow up is to offer something of substance such as a white paper, good concept or idea based on the conversations you've had.

In the end, for sophisticated advisors and consultants, the most important thing you have to offer is you, so make sure you prove the value you can add to their investment programs.

 

By Marilyn Dale