We like to think investment is about understanding data and facts. But relationships are at the heart of the industry. Yet asset managers often have contradictory attitudes to this reality.
Allocating capital to create future growth is a complex business. It requires deep relationships between salespeople and asset owners which often take years to nurture.
At first glance, it seems asset managers understand this – they hire the best salespeople they can afford and give them the time and resource to develop these relationships.
But at the same time, the industry is in denial, focusing on winning the business and not on maintaining those relationships over the long-term.
This emphasis is understandable.
In such an intermediated industry, with a heavy reliance on performance data to determine an asset managers’ suitability for a particular asset owner, its understandable many executives have reduced their clients to these transactional terms.
Variable client experience
This fear of losing your client because you fall off an investment consultant’s buy-list can unsurprisingly lead to variable client experience.
A heavy focus on winning client business to maintain flows can result in reducing the standard of assessing a client’s every touch point with the business.
There is also a problem of resource. A boutique manager may not have enough budget or people to build a client support function.
Larger managers have large teams whose deal with client relationships day-in day-out, but these teams can become mired in operational detail and over-reliant on surveys rather than face-to-face interaction.
With too little emphasis on or not enough resource allocated to client experience, operational issues can threaten hard-won business. Problems as early-on as onboarding clients or inadequate reporting can unpick the years of hard work.
Doing it differently
An asset manager cannot wish away the intermediated nature of institutional investment with its reliance on performance data but a focus on deepening their understanding of clients could help them to retain these relationships.
An independent assessment of these client relationships can show a business what’s working well and what needs improvement. An equal focus on quantitative and qualitative will build a more complete picture.
Nor does underperformance need be the death knell for a client relationship.
Providing clear explanations to clients of the greater impact behind a portfolio’s design, especially those that have sustainability at their heart, can help to refocus the attention towards the long-term and away from the short-term noise of market movement.
Today’s clients are the key to tomorrow’s success
A transactional mindset can result in asset managers focusing too much on winning new business and not enough on thinking about how nurturing existing clients can help you to adapt to a fast-changing market place.
By shifting emphasis from selling products to solving your clients’ problems, properly designed research can give you a profound understanding of the challenges asset owners face and how they want to adapt their portfolios.
This inside track can give an asset manager the edge over their competitors on which problems it needs to solve for current and future clients and what values they are looking for in their investment partners.
