Sondhelm: Because performance alone doesn’t win mandates, especially from institutional investors. Sure, your fund’s returns might get you to a finals presentation with a pension fund committee, but chances are you’re going against two or three other firms with similar—or potentially better—results and stronger brands.
Too often salespeople go into the presentation with thick pitchbooks packed with numbers—and that’s all they talk about. Why go over information they can review on their own later on? Instead, use that precious 30 to 60 minutes to focus squarely on the qualitative factors. These are the “How,” “Why” and “Who” aspects I mentioned before. If you do this right, every member of that committee should be thinking, “This firm has the right people at the helm, they’re in it for the long haul, and their investment process and thinking aligns with our requirements as fiduciaries. This gives us the better understanding, reassurance and confidence to make this important decision”
Hortz: How does all this help an asset management firm increase “franchise value” and sustainable profits?
Sondhelm: A sound sales and marketing strategy with a compelling investment story at its core helps everyone in the firm, from the CIOs to inside wholesalers, focus on activities that consistently convey the core values and strengths of your firm. Marketing people who tell your story effectively on the web, in print and, on social media will generate more inquiries and qualified leads. Salespeople will feel more confident when they walk into a finals presentation or an advisor’s conference room.
Now, while a single $100 million institutional win certainly deliver a huge revenue lift, I believe that many smaller firms are better off incrementally building that $100 million by convincing many advisors to use their funds with their clients. Think about it: If 25 independent investment advisers each invest a total of $4 million spread among 100 of their clients, you’ve now built a community of 2,500 investors—many of who are either mass affluent or high net worth—who will now be aware of your firm. These are sticky assets that are unlikely to be sold even if the market tanks. If performance holds up, investors may purchase more shares and both they and advisors might talk your fund up with their peers, which can lead to more sales with no extra effort. That’s the kind of brand loyalty advertising can’t buy.
Hortz: On another note, tell us about your new online Asset Management Growth Assessment you recently launched. Have the early results from asset managers responding to your survey brought forth any surprises? Have you been able to glean or uncover new insights or are results just reinforcing the trends you just mentioned?
Sondhelm: We decided to launch this assessment to help our clients understand the most common areas of concern among asset managers and the major perceptions among different market segments that are either helping or hindering their ability to grow. We’re still in the early stages of this research, but already we’re seeing that there is a great deal of uncertainty and confusion among asset management firms over what they need to do both from an organizational standpoint and in terms of revising or rebooting their business development strategies.
I welcome any asset managers reading this to participate in our Growth Assessment Survey. Once you complete the survey you’ll be able to download our Sondhelm Partners’ whitepaper, “How to Rethink Your Growth Strategy Now: A 13-Point Checklist.”
Hortz: What is your best advice and recommendation for asset managers on the steps to take to strategically address the challenges they will increasingly be facing in 2019 and beyond?
Sondhelm: My best advice to asset managers is to start preparing for the inevitability of the industry challenges coming this year and beyond. A growing body of independent research, and my experience from the real-world competition trends I see happening out there in the industry today, all point to active asset managers needing to direct their companies with more strategic management and distribution approaches that focus on organic growth.