Ideas...for helping investment managers win and retain assets
Ideas...for helping investment managers win and retain assets
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Increase Your Market Share through Superior Relationship Management
January 2009

Fund sponsors are facing the worst economic conditions since the Great Depression. Businesses are experiencing major profit declines. Unions face layoffs daily. And, universities have seen their endowments plunge at a time of rapidly rising costs and enrollments.

To make matters worse, many investment products used by investors have never been more complex and hard to understand. Thus, 2009 shapes up to be a perplexing year for institutional, high-net-worth and retail investors alike with all parties asking fundamental questions from their advisors and managers.

The "Five R Strategies" of 2009

In response to the 2008 market crisis, in 2009 institutional investors will follow the "Five R Strategies" reviewed below:

  1. Many will rebalance back to their targeted asset allocations. Rebalancing may be gradual or implemented all at once. In all likelihood, equities will be the asset class that benefits the most.
  2. Certainly, many will replace investment managers who have not met performance expectations
  3. Others will respond to tactical opportunities by investing in asset categories they believe are at historically attractive valuations. For example, bank loans, distressed debt, and emerging market investments may receive assets from investors following this strategy
  4. Some will rethink their longer-term investment strategy and associated allocations. For many, strategic rethinking will result in adding new asset categories, moving to LDI products, reducing overall plan risk, and throwing in the towel on investment products deemed to be too illiquid and/or esoteric
  5. Finally, some may simply refrain from making any changes to their current fund assets.

The first four "Rs" present opportunities for managers

Under each of the first four strategies, significant assets will shift from one asset type to another and often one investment management organization to another. Like all competitive situations, there will be winners and losers.

Winners will not simply be firms with the best performance. Winners will be those firms that are counted upon for advice as well as good investment management.

Undoubtedly consultants will play a major role in advising fund sponsors. But increasingly fund sponsors want a variety of perspectives on the decisions they face...including informative dialogues with their investment managers.

Being a trusted advisor to your clients

Being a trusted advisor is a win/win for both clients and investment managers. Clients receive additional insight and value. Investment managers are viewed as a solution provider – a superior position from which to introduce appropriate products and services. Below we offer four keys to being a trusted advisor.

1. First and foremost, you must put clients' best interests first. That may mean advising them to make a decision that costs you revenue...because the prudent move is to invest in an asset class or product you don't offer. The key here is recognizing that the relationship is of higher value than any one mandate. The academics call this being "selflessly independent".

2. Second, understand the totality of their situation. Being credible as a trusted advisor requires knowing your clients intimately. You have to understand things like: Why is their plan structured as it is? What is the client's general investment philosophy? And, importantly, which of the aforementioned "5 R Strategies" are they likely to follow and why?

A fund sponsor once told us the following:

"The best client servicers make it a habit to really chat with us – get to know us somewhat socially. Then they find out what our hot buttons are, what we need, etc. In doing so they may find out that we're thinking about completely revamping our 401(k) plan...and our interest in getting lower fees."

3. Third, share with clients what you are experiencing. You have first hand exposure to other clients and consultants. You see what actions others are taking. While the majority is not always right, prudent investors benefit by that perspective. At the same time, some outlier thinkers may have interesting ideas that could work for your client.

4. Fourth, tell them what your organization thinks. Determine your firm's opinion on key issues facing fund sponsors. What are you seeing? What should fund sponsors be considering given the current situation? What do you feel comfortable recommending to each of your clients?

Conclusion

In the aftermath of the 2008 market crisis, significant assets will shift between asset types and investment management organizations. Positioning your firm and staff as a trusted advisor will determine whether your firm gains or looses market share.

Following are some of the "make or break" relationship management questions facing investment managers in 2009:

Do we understand the key issues facing each of our clients? If not, how do we attain that understanding?
What is our opinion on those key issues? Have we documented and communicated our opinions internally?
What should we tell our clients about both the mandates we manage for them as well as their broader issues?
Have our client relationship managers been trained on relationship management best practices?

Expenses are obviously harder to justify at a time when revenues and budgets are under pressure. But given the significant asset movement expected in 2009 it is more imperative than ever to prepare your firm and staff to interface successfully with clients.

Consider retaining Eager, Davis & Holmes to help you. We know industry best practices and can make a difference for your firm. For more information, please call Glenn Davis at 502-657-6478.

Join Our Mailing List
Name*:
Title:
Organization*:
Email*:
Phone*:
  *required field
Increase Your Market Share through Superior Relationship Management
January 2009

Fund sponsors are facing the worst economic conditions since the Great Depression. Businesses are experiencing major profit declines. Unions face layoffs daily. And, universities have seen their endowments plunge at a time of rapidly rising costs and enrollments.

To make matters worse, many investment products used by investors have never been more complex and hard to understand. Thus, 2009 shapes up to be a perplexing year for institutional, high-net-worth and retail investors alike with all parties asking fundamental questions from their advisors and managers.

The "Five R Strategies" of 2009

In response to the 2008 market crisis, in 2009 institutional investors will follow the "Five R Strategies" reviewed below:

  1. Many will rebalance back to their targeted asset allocations. Rebalancing may be gradual or implemented all at once. In all likelihood, equities will be the asset class that benefits the most.
  2. Certainly, many will replace investment managers who have not met performance expectations
  3. Others will respond to tactical opportunities by investing in asset categories they believe are at historically attractive valuations. For example, bank loans, distressed debt, and emerging market investments may receive assets from investors following this strategy
  4. Some will rethink their longer-term investment strategy and associated allocations. For many, strategic rethinking will result in adding new asset categories, moving to LDI products, reducing overall plan risk, and throwing in the towel on investment products deemed to be too illiquid and/or esoteric
  5. Finally, some may simply refrain from making any changes to their current fund assets.

The first four "Rs" present opportunities for managers

Under each of the first four strategies, significant assets will shift from one asset type to another and often one investment management organization to another. Like all competitive situations, there will be winners and losers.

Winners will not simply be firms with the best performance. Winners will be those firms that are counted upon for advice as well as good investment management.

Undoubtedly consultants will play a major role in advising fund sponsors. But increasingly fund sponsors want a variety of perspectives on the decisions they face...including informative dialogues with their investment managers.

Being a trusted advisor to your clients

Being a trusted advisor is a win/win for both clients and investment managers. Clients receive additional insight and value. Investment managers are viewed as a solution provider – a superior position from which to introduce appropriate products and services. Below we offer four keys to being a trusted advisor.

1. First and foremost, you must put clients' best interests first. That may mean advising them to make a decision that costs you revenue...because the prudent move is to invest in an asset class or product you don't offer. The key here is recognizing that the relationship is of higher value than any one mandate. The academics call this being "selflessly independent".

2. Second, understand the totality of their situation. Being credible as a trusted advisor requires knowing your clients intimately. You have to understand things like: Why is their plan structured as it is? What is the client's general investment philosophy? And, importantly, which of the aforementioned "5 R Strategies" are they likely to follow and why?

A fund sponsor once told us the following:

"The best client servicers make it a habit to really chat with us – get to know us somewhat socially. Then they find out what our hot buttons are, what we need, etc. In doing so they may find out that we're thinking about completely revamping our 401(k) plan...and our interest in getting lower fees."

3. Third, share with clients what you are experiencing. You have first hand exposure to other clients and consultants. You see what actions others are taking. While the majority is not always right, prudent investors benefit by that perspective. At the same time, some outlier thinkers may have interesting ideas that could work for your client.

4. Fourth, tell them what your organization thinks. Determine your firm's opinion on key issues facing fund sponsors. What are you seeing? What should fund sponsors be considering given the current situation? What do you feel comfortable recommending to each of your clients?

Conclusion

In the aftermath of the 2008 market crisis, significant assets will shift between asset types and investment management organizations. Positioning your firm and staff as a trusted advisor will determine whether your firm gains or looses market share.

Following are some of the "make or break" relationship management questions facing investment managers in 2009:

Do we understand the key issues facing each of our clients? If not, how do we attain that understanding?
What is our opinion on those key issues? Have we documented and communicated our opinions internally?
What should we tell our clients about both the mandates we manage for them as well as their broader issues?
Have our client relationship managers been trained on relationship management best practices?

Expenses are obviously harder to justify at a time when revenues and budgets are under pressure. But given the significant asset movement expected in 2009 it is more imperative than ever to prepare your firm and staff to interface successfully with clients.

Consider retaining Eager, Davis & Holmes to help you. We know industry best practices and can make a difference for your firm. For more information, please call Glenn Davis at 502-657-6478.

Join Our Mailing List
Name*:
Title:
Organization*:
Email*:
Phone*:
  *required field