Sondhelm: Developing a conscious strategy makes you challenge your assumptions, ask tough questions, and focuses you down to addressing the specific challenges and opportunities in front of you head-on. Developing a strategic plan will help asset managers focus their limited resources but also make needed business investments. My job is to help steer them in building that strategy, that targeted focus, and to implement clear actions which will maximize their sustainable growth, such as, fixing organizational deficiencies, reducing unneeded expenses, revamping and ramping up their business development efforts, and getting their differentiated firm story out to the marketplace.
Hortz: How does one become a strategist and start honing a more strategic mindset and approach to your business?
Sondhelm: The first thing you need to do is abandon the mindset that the measure of strategic success is activity. A thousand cold calls that generate no meetings and a dozen email marketing campaigns that generate no clicks to your web site are wasted efforts.
Take a step back and do an honest evaluation of your firm, its products, its people, its expenses, and its business results. Map its competitive strengths and weaknesses. Figure out how much AUM growth is coming from net inflows versus market returns. Find out where most of these inflows are coming from—RIAs? Wealth management firms? Pension funds and endowments? Brokers? Project how much inflows will need to increase year over year to buffer AUM drain during a bear market. Estimate how much net revenue might shrink if you need to reduce management expenses. Evaluate every aspect of your sales and marketing efforts, from the win-rates of your sales team to the quality of your web site and blogs, marketing materials and pitch books.
Once you’ve completed this analysis, you can use this information to develop a more focused strategy and action plan to address the areas that will deliver the greater impact in terms of bringing in new assets and maximizing profitability.
Hortz: What areas of greater impact have you uncovered that many asset managers are not focusing on now?
Sondhelm: Too often I see sales and marketing strategies focusing on the “What.” What we do. What our products are. What the total returns are. And most prospects have the same reaction: “So what?”
In this environment of increasing commoditization and skepticism over the value of active management, “Why,” “Who” and “How” are becoming as important as the numbers. Investors and advisors can find performance data on your website and on Morningstar. What they want is detailed explanations of how your investment process generate alpha. Why your approach is different and more effective than those of your competitors. Who on your team is developing and managing its implementation and how and why they’re qualified and personally motivated to do so.
Effective asset managers turn all these “Ws” into a compelling story that provides the proof behind the performance. One that convinces an investor or intermediary that your firm and its funds deliver results that are the result of skill rather than luck and has a story behind the numbers that they can relate to, that they find reassuring and relevant.
Hortz: Why is the positioning the asset manager around story so vitally important?