Posts tagged 'client'
Since the first of the year, there has been a lot of buzz around business picking up, and many in the industry are finally exhaling. But as more sales opportunities arise in asset management than last year, many are also finding that their approach needs to be altered in order to successfully close business. The post-crisis environment is characterized by more cautious customers who are demanding more skills and services to meet their needs. It is not sufficient for sales personnel to understand their products; they must also be insightful about how their products will meet the specific needs of the client. In fact, the use of the word “product” is now becoming passe. The sale is now solutions based. Clients want to understand how the asset manager will react to market volatility when it returns; and, they generally believe it will return.
Therefore sales professionals must gain a deeper understanding of their clients’ and prospects’ needs than they have in the past, and be able to convincingly explain how the capabilities they represent will meet their needs. Furthermore, they must convince their prospects that the asset manager they represent can effectively navigate ongoing, difficult, and unpredictable markets better than their competitors. Those that master these skills will be the winners in this challenging environment.
March 9th, 2010
Recently I wrote of how both traditional and alternative managers need to focus on their clients. Their styles are converging in the marketplace and the lines between the two types of firms are blurring. This can be seen in both the products and services they provide, and the approach to their marketing efforts.
Cutting edge firms will adopt the best practices from both traditional and alternative managers. These practices will include: truly differentiated investment capabilities; strategic business planning; and outstanding execution.
The big battle ground for these managers is likely to be the pension fund industry. Pension funds have not allocated nearly as large a percentage of their assets to alternatives as endowments have. We are likely to see a secular rise in that allocation. Asset managers who can provide both investment excellence and client focused services stand the best chances for winning the battle. Aligning interests with these institutions and committing to long term relationships will be key elements to success.
January 25th, 2010
There has been much talk lately of “convergence” in asset management. That is, are alternative and traditional asset management styles and products converging so that there will no longer be much distinction between the two? Some years ago DE Shaw launched 130/30 strategies which are hybrids between the two forms of management. Recently Citadel announced they were launching a traditional fixed income business. There are rumors of other alternative managers launching traditional businesses. Certainly, over the past several years, many traditional managers launched alternative products, although in most cases they were sidelights to their main businesses.
In my view, distinctions between alternative and traditional forms of investment management have always been somewhat artificial. Certain strategies and products have blurred the lines for years. At the end of the day successful investment management strategies need to add economic value to clients and meet the objectives clients set out for those strategies within the context of their overall portfolios. Labeling the strategies alternative or traditional adds little to the understanding of whether they add such value and are proper fits.
Clearly, there are cultural and language differences between firms that have their roots in the traditional vs alternatives sides of the business. But those are inwardly focused dimensions. In order to succeed and prosper in the current environment, asset managers must, more than ever, keenly focus on client needs and respond to them with solutions-based strategies. In their words and actions they must put the client first, which might require massive cultural changes for some managers. In the end, though, we are all in business only to serve our clients.
January 11th, 2010
Selling investment management services to institutions has always been a consultative process. Sophisticated investors want to understand and appreciate the capabilities of an asset management firm. This knowledge is generally transferred over a period of time in a series of encounters between personnel from the asset manager and institutional investors. However, for quite some time, the marketplace has forced these capabilities into buckets with specific names. Initially they were styles within asset classes, such as large cap growth and high yield fixed income. Then, we had the division between traditional and alternative investments. This has been followed by more solutions-based strategies such as Liability Driven Investing.
When businesses flourish, there is a tendency to keep things the same as much as possible. Therefore, changes in business approach are slow, and the investment management industry has experienced this until recently. For example, the death of style boxes has been discussed for many years, but many manager searches still are defined by style box. However, industry and market events of the past year are likely to disrupt this relative stability. More and more managers are telling me that their opportunities are now about specific customized capabilities rather than defined products. Artificial distinctions between alternative and traditional strategies are blurring. Easy labeling is fading in favor of specific descriptions of capabilities designed to meet specific client needs. In order to succeed in this new environment, managers must meet the challenge of convincing institutions that they can fit their capabilities to client objectives, while continuing with their focused consultative approach.
July 20th, 2009
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