[Recent disruptions in the economy, the markets and society overall have become a defining challenge to all firm managements across the industry. While rising waves lift all boats, receding waters uncover alarming weaknesses and surprising strengths. In contrast to the ongoing reporting of active asset managers under assault by passive investments and poor relative performance pushing them on a slow march to their demise, boutique managers have been demonstrating strong resilience in the face of this pandemic environment.

A recent survey by Dan Sondhelm of Sondhelm Partners — a firm that helps asset managers attract investors and strengthen brands — decided to dig deeper into the experiences and decisions being made by C-level executives in boutique asset management firms through the COVID-19 pandemic. Entitled “Weathering the Storm — How Boutique Asset Managers Are Adjusting to the New Reality,” the survey compiled answers across a wide range of topics including leadership’s opinions about the state of their business from business development, sales and marketing to client service, staffing, product development and financial stability. Their answers provide a revealing picture of the competitive state of active asset managers which, despite the many death notices that have been written, are very much alive and kicking.]

Bill Hortz: Why did you decide to conduct this survey of boutique asset managers?

Dan Sondhelm: We have always wanted to conduct research that reveals the business development, marketing and client service strengths and challenges among boutique asset managers. The COVID-19 panic and the resulting market gyrations that followed added the opportunity to expand the scope to find out how senior managers also feel about their firms’ financial stability, staffing levels, future product development efforts, and any initiatives to either sell their firm or acquire other firms.

Hortz: How did you go about constructing the survey and determining the questions or areas to cover?

Sondhelm: Our original plan was to focus our questions on business development and marketing. How effective are their salespeople? Is their story and positioning resonating in the marketplace? Do they feel they are doing a good job using virtual communications, content, digital marketing, and PR efforts?

But as we were developing the survey in April, we realized that conducting it at the peak of the pandemic crisis gave us the opportunity to see if they felt that the effectiveness of their business practices had improved or declined over time. That is why we asked them to rate these practices in the current environment while also asking them to retroactively remember how they felt about them in the spring of 2019.

In the end, we received 55 responses from C-level executives at boutique asset managers.

Hortz: What were your key findings from the responses?

Sondhelm: Contrary to what people might think, most boutique firms are not suffering massive outflows or teetering on bankruptcy. While most are not hiring, only 11% are thinking of reducing headcount. Less than one in five need additional cash. And while few firms are seriously considering M&A initiatives, among those that are, a higher number are interested in buying other firms of funds than they are in selling out.

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