Art & Science Archive
Client presentations by investment firms tend to fall into one of two radically different categories. Either they are too like new business presentations, reselling the relationship without a sufficiently sharp focus on the client’s portfolio. Or they are too unlike new business presentations, failing to reinforce — and at times implicitly contradicting — the most basic elements of the investment manager’s story. Some client presentations convey dangerous intellectual intransigence by refusing to acknowledge change when change already has occurred or may be necessary. The following suggestions are designed to help you instill confidence during client presentations, especially during periods of underperformance.
1. Sharpen Your Focus on the Audience
Open with what is bound to be most important to the client: a forthright discussion of portfolio performance. Explain what did and did not work and why, and describe how the portfolio is positioned for the future. Do not open with a recitation of basic facts about your firm, undertaking to reeducate your client from scratch in a limited time frame: “Here is who we are. Here is what we do. Look at all the new additions to our org chart!” This approach can backfire. A logical response is, “We know all that. We hired you already, remember? But what is going on with our portfolio now, and what is your outlook?”
2. Reinforce Your Identity
In reviewing the portfolio, reinforce your investment philosophy and process. For example: “This is a classic holding for our company. You will recall that we like to invest in companies with three primary characteristics…” Reinforce your identity as a firm in the context of the client’s portfolio. Briefly communicate any news about your firm up front or in closing, consistent with the client’s stated preference.
3. Strike The Right Balance
Neither assume too much nor too little knowledge on the part of your audience. Balance the specific (the client’s portfolio) with the general (your investment strategy and what is going on with the market as a whole). Present past performance in light of clear-headed consideration of the future. When performance is strong, remind your client why it might not always be strong. When performance is weak, remind your client why performance is likely to turn around given the nature of your strategy. Explain which aspects of the process are the same (and always will be) and which aspects may have changed for the better.
4. Admit to Change
In most walks of life outside the investment world, change is perceived as positive. Many investment managers, in fact, like to invest in change because change spells opportunity. Yet these same investment managers will go to great lengths to hide or disguise change at their own firms. Changes to the investment process are never called by their real name but instead are euphemized as “refinements” or “enhancements.” Investment managers are afraid that change will be viewed as a dangerous break in consistency. But what if consistency isn’t working? What if the world has become more complex and difficult, requiring change to remain successful? Well then, here is a truly revolutionary idea: admit that you have made a change in your investment process. Plan sponsors and consultants are not naïve. They understand change and may even embrace it, particularly if you provide a compelling explanation of why change is necessary.
5. Answer as Asked
There are a series of questions likely to arise in client presentations that rarely receive explicit, decisive answers. Many, not surprisingly, relate to the C-word:
- Has your investment process changed?
- What mistakes have you made, and what changes have you made to your investment process as a result?
- You say you are a bottom-up manager, yet your performance has been hurt recently by sector allocation. Are you perhaps going to change some aspects of your process?
One of the worst things you can do in a client meeting is to avoid answering such questions in a straightforward manner. Evasive or simplistic responses will erode your client’s confidence in you and your firm.
WHAT DO CLIENTS WANT?
Your clients want you to succeed. Even when they challenge you, they do so out of a sincere desire to validate their own hiring decision. They want you to meet their challenge, to rise to the occasion, to confront the complexities associated with change and remind them, decisively, why they chose your firm in the first place. They want you to give complexity its due by providing direct, thoughtful, nuanced answers to real-life questions.
This article summarizes comments by Liz Hecht of Alpha Partners at Progress Investment Management Company’s 11th Annual Plan Sponsor and Emerging Manager Conference in Scottsdale on November 22, 2005.
RESOURCES
Clients for Life: How Great Professionals
Develop Breakthrough Relationships
Jagdish Sheth and Andrew Sobel
Making Rain: The Secrets of Building Lifelong Client Loyalty
Andrew Sobel
Marketing Institutional Money Management Services
Meeting the Needs of Today’s Plan Sponsors and Corporate Treasurers
(See in particular Chapter 8, “Maintaining Positive Relations by Meeting Client Expectations”)
The Trusted Advisor
David H. Maister
Articles in this website’s Art & Science archive
Bedside Manners for Client Service Professionals
Client Service: What New Business Prospects Want to Know
How to Stay Up When Your Numbers Are Down