As asset managers try to meet client needs in the “new normal” environment, they will have to provide specific investment solutions more than ever. The best investment firms have always approached their client needs in this manner. They first seek to understand those needs in great depth, then provide solutions to meet those needs based on their investment capabilities.
Other managers approach the marketplace with a menu of defined products which may or may not meet client needs. If there is little or no flexibility around those products, in terms of investment design, packaging, or pricing, there must be a very close match between client needs and product features for a sale to be made and relationship to be built.
The “new normal” will be defined, in part, by greater buying leverage and less selling leverage. In this environment, clients will demand even greater flexibility around investment solutions so that their specific needs are met. Firms that have historically approach the marketplace in this manner will be in the best position to succeed.
October 7th, 2009
This is one of the most frequent questions I get from managers. Many managers look for an ideal sales structure. How should they organize sales vs. client relations; or, sales vs. consultant relations? Should they segment their sales force by client type or organize geographically? Where should product specialists report? How should the marketing and sales organization align with product development and management?
The answer to all of these questions is that it depends! There is no one ideal structure. If there were, all firms would have it. The best structure for a particular firm depends on: its market position; growth goals; existing client relationships; existing personnel; and investment capabilities. Designing and implementing the right structure will align the firm’s investment and marketing sides so that all personnel are synchronized and it’s brand in the marketplace is clear and strong.
Look for my new white paper coming out this week on building a premier marketing and sales organization.
September 28th, 2009
It seems that both strategic and tactical asset allocation is in transition. Strategically, conventional approaches used over the past 30 years are being called into question. Analysis of risk measures and correlation between asset classes are being challenged. A generally accepted new approach may emerge, but we haven’t seen it yet.
Tactically, there is evidence of some rebalancing into equities after the big drop, but not yet sufficient to return to pre-bear market levels, although the rally of the past six months has helped. Many investors have not taken the actions necessary to return their portfolios to their strategic allocation.
The severity of the recent market events will affect investor behavior for some time. One beneficial aspect of this period is that it will generate some new thinking around asset allocation which is likely to inform investors in the future.
September 23rd, 2009
In my discussions over the past few months, I find a lot of inaction both from an investment and business standpoint. Many investors and managers seem to be watching the markets gyrate without making any moves. Similarly, there seems to be paralysis on the business side. Since firms are suffering from a profitability standpoint, they seem to be frozen, or cutting costs without much strategic thought.
Some consider this inaction prudent; they are exercising a sense of calm within the storm. Another description might be complacency. They are neither taking actions to avoid additional risk, capitalize on opportunity, or manage their business proactively. While it has been difficult to keep up with the volatile environment, managers who have well thought through strategies, and execute efficiently, are likely to be those that take most advantage of the tumultuous times.
September 14th, 2009
As investment firms react to the new post-crisis environment, one of the issues they will need to address is what they should outsource. I have no doubt that outsourcing will continue to increase in the industry as firms will be reluctant to staff up with full time help to the degree they have in the past, as managers will be cautious to increase their fixed costs.
In the sales area, the outsourced solution is third party marketing. These businesses should continue to serve small managers and alternatives firms, but whether their use with larger traditional firms becomes more popular is unclear.
I see the largest potential increase in outsourcing in the marketing area. There are now quality resources available on an outsourced basis in RFP production, data base population, all forms of writing and communications, presentation design, website design, and various other elements of the marketing process. Managers should consider these variable cost solutions to their marketing needs carefully before restaffing with full time employees.
September 7th, 2009
Anticipation of recovery seems to be the talk of the town, or the beaches, this summer. As it applies to the investment management industry, recovery might refer to the economy, the markets, or the industry itself. There are clear signs that we may have seen the worst for all of these. But what next?? The debate rages whether the economic recovery will take the shape of a V, U, L, or double dip into a W. Will the markets continue to march on, or suffer a significant correction? Will business growth and profitability return to levels that existed prior to the downturn, or will managers continue to struggle for some time?
The fact of the matter is that nobody really knows. I find managers cautiously optimistic, hoping to return from vacations to recovery and expanding businesses, but not with a high degree of confidence. How should management respond to this environment? By staying nimble, investing in targeted ways, draining inefficiencies out of their organizations, stepping up communication with their employees and clients, and focusing on execution to drive results. Planning must be dynamic, thoughtful, and flexible. I am very hopeful that recovery is near, but my sense is that volatility will remain high, as it applies to the economy, markets and the industry, and management which stays very close to the marketplace to react to quick changes will prove more successful than their counterparts who don’t.
August 26th, 2009
I’m working with a client who is now constructing a business/marketing plan. As I mentioned in my last white paper, a SWOT analysis is very helpful in this exercise, and it’s proven to be invaluable for my client. This technique analyzes stengths, weaknesses, opportunites, and threats, and it really helps one focus. It can help to quickly identify areas for improvement and where to really concentrate one’s attention. One important point: when planning, don’t get to the end of the process before bringing in team members and subordinates. You will always get valuable input, and investment management employees generally don’t appreciate a plan which is delivered to them for execution without having had any input.
August 19th, 2009
Last month, I posted some thoughts on this subject. Since then, I have continued to get numerous questions on this topic so I decided to expand on my thoughts. Many managers seem to be seeking training for their sales people. When I’m asked about that, I try to get underneath what they are really asking. Often it turns out that they are looking for solutions for a perceived lack of sales results. Training sales people seems logical, but it may not make sense if the problem with sales lies elsewhere. Further, standardized training is just that, standardized. It doesn’t seek to find the underlying problem. There are many possible issues ranging from firm and product positioning through general marketing to various elements of the sales process. When asked to help specifically in sales training, I seek to understand the entire sales process that the firm uses and find the weak points. These weaknesses may include sales presentation skills often addressed in standardized training, but frequently the problems are more complex and require more thoughtful solutions.
August 13th, 2009
It’s a tough time right now for any manager. Although there is far more optimism in the air than there was a few months ago, the investment community is still cautious. Many managers continue to have trouble gaining any business momentum. I have spoken to quite a few emerging managers lately who express frustration. These firms are either recent start-ups or just small managers who by virtue of their size fall into the emerging manager category. A number of these firms are questioning whether they can survive in an environment which seems to place a premium on stability. How will they attract assets if their prospects are afraid to place assets with a firm that may not survive?
If misery loves company, they should know that they have it with the large managers. Many of these firms have fallen out of favor, rightly or wrongly, due to their affiliation with other financial services businesses under scrutiny from the government and the public. Despite their size, they are not necessarily viewed as more stable than the small managers. Small managers, many feel, have the advantage of focus and dedication to their specific investment approach. They are also often employee owned which aligns their interests with their clients’ interests.
So, emerging managers should stay the course if they are passionate about their investment approach and their business. The investment management business tends to require considerable staying power before firms see the rewards of their efforts. But if they deliver strong investment results, dedicate themselves to their clients, practice persistence, and deeply believe in themselves, they are likely to succeed, perhaps dramatically, over time.
August 4th, 2009
A manager mentioned to me recently that their marketing and sales people and investment people are not on the same page with respect to products. The investment people know in their hearts that they can deliver certain investment capabilities to the marketplace, but their passionate pleas fall on deaf marketing ears. The marketing and sales people are certain in terms of what products and capabilities the marketplace demands, but their claims feel ignored by the investment staff. How can they improve their communication and arrive at consensus? Who should drive the process?
The answer is that it needs to be a collaborative process. Investment personnel are in the best position to know their strongest investment capabilities. Marketing and sales personnel are in the best position to understand marketplace trends, what is being demanded by their client base, and the state of the competitive environment. All of these factors must play a part in making important commitments to product development. Often a product development function exists to coordinate all of this. But with or without that function, communciation forums must be created to exchange information across departments so that all critical personnel arrive at the same conclusions with respect to product development and delivery. It is very important to create an open environment where all views are vetted and respected. Investment management requires a team oriented culture, not a rigidly divided one by function.
July 28th, 2009
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