TwitterFacebookLinkedInEmailRSS
logo

An editorial blog of CFA Society Minnesota

  • Home
  • About Us
  • Contact Us
    • Compensation Survey Contact Form
  • Subscribe to Blog via Email

Best Practices in Asset Manager Communications

18th June, 2014 · Tom Brakke, CFA
Tom Brakke, CFA

“The numbers speak for themselves.”

What asset manager with great numbers hasn’t wanted to toss a pitch book down on the table, utter those words, and wait for questions (only to return to the phrase over and over again in response to them)?

There are a few who have adopted that strategy (Bernard Madoff, for one, and some take-it-or-leave-it hedge fund managers), but for the most part it doesn’t fly for firms trying to win new institutional clients, even when the numbers are outstanding.

Therefore, an asset management firm must have a good communications strategy (and stick to it) if it is to succeed over time. The best practices for doing so were the topic of a recent presentation to CFA Society Minnesota by Judith McKinney and Gordon Dickinson of Callan Associates.

The presenters stressed the importance of a thorough communications strategy that is consistently applied. That’s a challenge, given that individuals have different styles and portfolio managers would prefer to be back at their desks evaluating ideas rather than answering questions about how they do what they do.

Large firms can marshal the brute force of their resources to hone such a strategy and to produce outstanding materials, but their presentations can lack the personality and display of camaraderie that are second nature for those at a small firm that are used to working closely together.

Each element of the communications chain needs attention, including requests for proposals, presentations for new business (and for review meetings), newsletters, white papers, websites, meetings with consultants, and whatever other opportunities exist to reinforce a firm’s message.

Through it all, there needs to be an ethos of quality, accuracy, integrity, and honesty. Superior materials and presentations provide a platform from which to convey the key messages that the manager wants to deliver.

The dynamics of a presentation for new business are critically important. The pitch book (whether in hard copy or on a screen) can be an effective vehicle through which the proper message is conveyed or a framework for failure, so the speakers from Callan spent a good deal of time reviewing its construction and delivery.

They said that “95% of the decks are pretty good” in following the four Ps – philosophy, people, process, and performance. A common problem is getting “bogged down in too many details” rather than concentrating on delivering a compelling narrative; they stress that “the appendix is your best friend.” Put the minutiae there.

In fact, “the best presenters don’t use the book very much.” They make eye contact, they connect with the audience, and they tell their story.

The flow of a presentation probably seems unimportant in the scheme of things, but several times the speakers from Callan talked about the quality of the transitions from one member of a presenting team to another. The little things matter, which is why practice is critical and thorough preparation often separates the managers that “show well” from those that don’t.

The most spirited interaction between members of the audience and the presenters from Callan revolved around the degree to which consulting firms are pro-cyclical in their approach to the recommendation of strategies and the selection of managers – going with recent winners rather than seeking out good managers who have been struggling. The discussion was prompted by a statement in the presentation deck that when meeting with consultants, managers should “focus on an investment product/strategy that is doing well; underperforming strategies may be non-actionable for the consultant.”

So, the numbers may not speak for themselves completely, but they speak very, very loudly. In the mutual fund world, “a five-star rating is the trigger for acceptance” (even though it is based upon past performance) and for an institutional mandate, “if you’re in the finals you don’t even have to talk about performance; you wouldn’t be there without performance.”

Therefore, the biggest hurdle to be jumped over in order to be hired is good performance. On the flip side, many good firms are fired because of a spot of poor performance. The representatives from Callan said that a big part of their job is trying to talk clients out of firing managers, but they stressed how behaviorally difficult it is for those clients – and for themselves – to go against the flow. They could cite just one situation where Callan recommended a firm that had subpar performance over the past few years but what they felt was the foundation for good performance going forward. (It turned out very well.)

The meeting featured much good information for asset managers looking to improve their communications practices – and I would not minimize the importance of the recommendations. But it is disheartening to be reminded that at its roots, this is a business of herding, and numbers, for the most part, speak louder than words, even if experience shows that they can be deceiving.

Share this:

  • Click to share on Twitter (Opens in new window)
  • Click to share on Facebook (Opens in new window)
  • Click to email this to a friend (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
Posted in Hot Topic Commentary, Local Charterholders | Tags: Asset Manager, Best Practices, Communications |
« Super Mario
Inversion Layer »

Leave a comment Cancel reply

Your email address will not be published. Required fields are marked *

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Recent Posts

  • Important Minnesota Financial Literacy Legislation Update 03/20/2023
  • New Financial Literacy Effort Launched for Minnesota Communities and Schools 09/30/2022
  • End of an Era 07/26/2022
  • Starting my Midwestern Goodbye 04/05/2022
  • Face-Off 10/18/2021

Submit your inquiry here

Categories

  • Compliance (3)
  • Department of Labor Fiduciary Rule (1)
  • Ethics (7)
    • Ask the Ethicist (2)
  • Freezing Assets Shout Out (34)
  • Hot Topic Commentary (177)
  • Intellisight (1)
  • Local Charterholders (88)
  • Member Spotlight (4)
  • Society President Letters (15)
  • Spotlight on MN Companies (1)
  • Valuation (2)
  • Weekly Credit Wrap (35)

Archives

  • March 2023 (1)
  • September 2022 (1)
  • July 2022 (1)
  • April 2022 (1)
  • October 2021 (1)
  • August 2021 (1)
  • May 2021 (1)
  • February 2021 (1)
  • January 2021 (2)
  • October 2020 (2)
  • September 2020 (2)
  • August 2020 (1)
  • June 2020 (1)
  • February 2020 (1)
  • December 2019 (1)
  • November 2019 (2)
  • October 2019 (1)
  • September 2019 (1)
  • August 2019 (1)
  • July 2019 (2)
  • June 2019 (1)
  • April 2019 (3)
  • March 2019 (2)
  • February 2019 (1)
  • January 2019 (2)
  • December 2018 (1)
  • November 2018 (2)
  • October 2018 (3)
  • September 2018 (1)
  • April 2018 (3)
  • March 2018 (8)
  • February 2018 (3)
  • January 2018 (1)
  • November 2017 (5)
  • September 2017 (1)
  • August 2017 (3)
  • July 2017 (1)
  • June 2017 (1)
  • May 2017 (1)
  • April 2017 (2)
  • March 2017 (1)
  • December 2016 (2)
  • November 2016 (2)
  • October 2016 (1)
  • September 2016 (1)
  • August 2016 (1)
  • July 2016 (2)
  • June 2016 (5)
  • May 2016 (2)
  • April 2016 (2)
  • February 2016 (5)
  • January 2016 (3)
  • December 2015 (1)
  • November 2015 (4)
  • October 2015 (6)
  • September 2015 (1)
  • July 2015 (1)
  • June 2015 (6)
  • April 2015 (2)
  • March 2015 (4)
  • February 2015 (2)
  • December 2014 (2)
  • November 2014 (7)
  • October 2014 (10)
  • September 2014 (3)
  • August 2014 (5)
  • July 2014 (2)
  • June 2014 (5)
  • May 2014 (9)
  • April 2014 (9)
  • March 2014 (8)
  • February 2014 (7)
  • January 2014 (8)
  • December 2013 (6)
  • November 2013 (7)
  • October 2013 (13)
  • September 2013 (4)
  • August 2013 (2)

Popular Tags

#memberspotlight 2015 Compensation Survey A Day in the Life BlackRock Board of Directors Carlson School of Management CFA CFA Charter CFA Charterholder CFA Charterholders CFA Institute CFA Institute Research Challenge CFA Minnesota CFAMN CFA Program CFA Society Minnesota CFA Society MN Changing Perceptions Chartered Financial Analyst charterholders Compensation Survey Diversity ESG ethics freezing assets shout out interest rates investment management Josh Howard Joshua M. Howard Member Engagement Minnesota non-GAAP earnings North Dakota Nuveen Asset Management President's Letter SEC Society President South Dakota Susanna Gibbons University of Minnesota Volunteer Volunteering Volunteers Weekly Credit Wrap women in finance
© 2021 CFAMN Freezing Assets - Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFAMN, FreezingAssets.org or CFA Institute.
  • Home
  • Log In
  • RSS Feed