Looking to make the move from in-house portfolio management to broad-based distribution? Financial advisors, family office professionals, investment research professionals and others create investment strategies on behalf of their clients, or even themselves, and then realize they’ve got something special that they may want to offer more broadly. The strategy chugs along, meeting the needs of private investors, until such time as the portfolio manager decides it is indeed ready, the world should know about this, and more assets in the strategy would be a win-win! Perhaps it seems as straightforward as simply making some calls, creating a great elevator pitch and one pager, and offering the strategy to colleagues and connections. Unfortunately, it is not quite that simple and the risk of going to market too soon is significant. You’ve got one chance, and one chance only, to make a first impression.
So, what does it take to be ready for prime time? Here are a few rules for the road that will make the process as effective, and efficient, as possible:
1. Don’t Step Off the Curb Too Soon—You’ll Get Crushed
It is incredibly tempting to jump right in—to leap ahead sharing your story and compelling numbers. Great performance is a massive motivator and leads portfolio managers and business owners to rush to market. However, the market has certain expectations, indeed requirements, to fully consider an investment opportunity. You can thank Bernie Madoff and many others for this reality; regulatory requirements, due diligence, enhanced screening and scrutiny are the norm in today’s market. Leaping before you have your ducks in a row is a huge mistake. You can’t get that first impression back. By going to market prematurely you are ultimately extending the time to adoption, rather than shrinking it. To be more specific, avoid at all costs sending around a half-baked strategy profile from a personal email address; it’s a non-starter.
2. Establish An Entity—Be the Ball!
One of the true business wins of modern times is how incredibly easy it is to start an entity. As a result, and for good reason, investors expect to see that a strategy worth investing in has a home, a team behind it, a philosophy and process, and infrastructure that demonstrates sustainability. Fortunately, within a few weeks and for very little money, a firm can be born, with a name, website and a presence all its own. Take these steps to establish a firm from which the product can be effectively and efficiently marketed:
• Name your entity; complete a search to ensure lack of overlap to other industry constituents
• Establish an LLC in a matter of minutes online
• Secure a URL almost instantaneously; incorporate an email that matches the
firm name (do not use a generic/personal email address in marketing)
• Establish an online presence using one of the myriads of website design tools, creating a baseline site with some core content revolving around the key elements of the firm and its offering
3. Study The Field—Who’s On First?