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Investment Marketing 1.0

Excess Returns

Monthly insights for investment marketing and sales professionals

November 2013

Maybe it’s a sign of optimism due to current stock market strength. Or perhaps more portfolio managers want to control their own destiny in an increasingly volatile world. Whatever the reason, Alpha Partners lately has received many calls from new investment firms wanting help with the ABCs of investment marketing. A recurring theme of these inquiries is, “We don’t know where to start.” This issue of Excess Returns defines and prioritizes key first steps, with advice on how to avoid the most common mistakes.

With best wishes,

Liz Hecht
Founder, Principal and Director of Research

Print a PDF of this newsletter

Volume 3 | Number 9

In This Issue

Investment Marketing 1.0

The Art of the Start

20 Ways to Win & Keep AUM

Alpha Partners is an investment marketing firm specializing in research and presentation strategy. Our goal is to create alpha (excess returns) by helping investment firms win, keep and diversify assets under management.

Alpha Partners LLC
435.615.6862

www.alphainvestmentmarketing.com

Investment Marketing 1.0

A few years ago, a board member for a fledgling private equity company introduced me to the managing partner. The board member explained that the company badly needed help with its marketing. Several conversations ensued and Alpha Partners ultimately submitted a proposal to the managing partner. After reviewing the proposal, the managing partner explained that the firm did not want to move ahead at that time. Instead, he told me, he and his partners wanted to focus on “just getting the word out.”

Having read his company’s existing marketing literature, I felt compelled to ask, with a bit more edge than I had intended, “Get the word out about what?” For “the word,” as far as I could tell, was a pallid variant of “Got deal flow?” And claiming “deal flow” as a competitive advantage in private equity is akin to claiming “bottom-up fundamental research” as a competitive advantage in public equity.

My question (“Get the word out about what?”) underscores one of the biggest mistakes that start-up investment firms typically make: they confuse sales with marketing. But there are other mistakes — and ways to get it right straight out of the starting gate. Here are a few basic guidelines that may be helpful — not only for recently founded firms but also for established companies launching new strategies:

Know what you are selling. As an investment company, you are selling two things: (1) your performance numbers and (2) the story of how you achieved those numbers and why you believe your approach is repeatable. The numbers are vulnerable to change; your story, by contrast, should have the clear ring of unalterable, timeless truth.

Present the numbers correctly. Firms such as The Spaulding Group can help your company navigate the complexities of GIPS compliance and otherwise bless your numbers as needed depending on the audience you plan to target. The next step is to make sure the numbers are updated regularly in the consultant, manager of manager and investment platform databases that your firm has identified as targets.

Understand the difference between marketing and sales. Many start-ups incorrectly believe that their placement agent or third-party distribution firm is going to handle the creation of marketing materials. Yet most placement agents and third-party firms specialize in sales (i.e., getting the word out) — not marketing. Some of these firms may well have the wherewithal to meet your new company’s marketing needs, but it would be wise to confirm this in depth. Ask who, specifically, will be responsible for creating the marketing literature? What is that person’s experience in investment marketing? How long has he or she been in this business? Does the individual have the critical faculties required to articulate a strong story about your company when a strong story is vital to raising assets? And finally, will there be an additional fee for these services or is it all part of one package?

Keep it simple and start small. Early in the life of your company, you need clear language free of clichés and simple, clean, clutter-free graphic design. You don’t yet need a tag line or white papers or advertising and the like. That can come later. But if you are to be taken seriously by consultants, registered investment advisors, managers of managers and prospective clients, you do need the following as soon as possible and in this order:

1.

Corporate identity such as letterhead, memo forms and business cards.

2.

A one-page profile of your firm and its investment strategy. (In the push to develop the presentation book, firms often forget that there is a more efficient way to share preliminary information. The presentation book should unfold the larger story introduced in this profile.)

3.

A 15- to 20-page presentation book consistent with institutional presentation best practices.

4.

A library of answers to frequently asked Request for Proposal questions.

5.

A simple starter website describing the firm, its reason for being and its approach to investing.

These are the must-have components of any investment marketing program. Getting them right requires a lot of work. You cannot merely (as some firms do) slap a PowerPoint presentation online and say, “Here is our new website.” The good news, however, is that much of this content does overlap. Once the firm has crafted a strong one-page profile, for example, that same language and look can serve as the foundation for the story told by the presentation book.

Respect intellectual property rights. I am aware of two firms that had to change their names within a year of starting because they failed to do a clearance search and secure the rights to their name. So if you think your company or product has a cool name (or logo or tag line), keep this firmly in mind: it might already belong to somebody else. And that somebody else, cautions our firm’s intellectual property attorney, Charles Roberts, does not have to be another investment company for conflicting ownership to become a big problem.

Test drive frequently to build conviction. Once you have a solid foundation for a strong investment marketing program, the final step is frequent test drives. Simulate situations where investment and sales professionals have opportunities to tell the story. Conduct mock presentations and Q&A prep sessions. In this way, you polish the marketing story and build genuine conviction in everyone who needs to tell the story well consistently.

In sum, that’s where to start: with a well-informed, tested, high-conviction, legally approved answer to the question, “About what?”

The Art of the Start

“I wish we could post all the information in this book on Sequoia Capital’s website,” said partner Michael Moritz, “because it would make our jobs much easier.” Guy Kawasaki’s The Art of the Start covers all aspects of starting a business, from writing a business plan to raising capital to branding and rainmaking. The chapters on “The Art of Pitching” and “The Art of Branding” will prove invaluable to investment companies seeking to build a brand.


In The Art of the Start, Guy Kawasaki provides marketing advice that start-up investment companies would do well to emulate.

20 Ways to Win & Keep AUM

Recently formed investment companies and established global firms alike will find inspiration in the Alpha Partners Presentation Best Practices Guide. The Guide provides straightforward advice on how to win business through the power of a strong story well told. Commissioned by one of our clients to train a global sales and marketing team, Alpha Partners retained the copyright to the Guide and now uses it to prepare participants for our presentation strategy and coaching sessions. The Guide provides a framework for developing an institutional-quality presentation and explores 20 presentation best practices in depth, including (my personal favorites) “Be Specific — Prove It” and “Sharpen Your Focus on the Audience.” This primer focuses on the presentation but has broad application to all investment marketing initiatives.

The Guide can be purchased directly or used in conjunction with a training program. For more information, please contact me by email or phone: 435.615.6862.

Questions? Comments? Dissent? Click here.

Click here for other issues of Excess Returns.

© 2013 Alpha Partners LLC Alpha Partners LLC
Marketing for Excess Returns®
1062 Oakridge Road South | Park City, UT | 84098

You are receiving this newsletter as a member of the investment community. If you no longer wish to receive it, please respond to this email with “No More Penguins” in the subject line. To subscribe to this newsletter, send an email with your request to info@alphainvestmentmarketing.com. Your privacy is important to us. We will never rent, sell or share any information that you provide.

Know Thy Competitors

Excess Returns

Monthly insights for investment marketing and sales professionals

November 2012

Competitor intelligence can confer a decisive advantage in winning business — or it can prove to be a foundation for indecision and mediocrity. This issue of Excess Returns explores the uses and abuses of competitor intelligence by asset managers.

With best wishes,

Liz Hecht
Founder, Principal and Director of Research

Print a PDF of this newsletter

Volume 2 | Number 6

In This Issue

Know Thy Competitors

A New War Story

Rework

Alpha Partners is an investment marketing firm specializing in research and presentation strategy. Our goal is to create alpha (excess returns) by helping investment firms win, keep and diversify assets under management.

Alpha Partners LLC
435.615.6862

www.alphainvestmentmarketing.com

Thank You

We want to thank everyone who inquired about this newsletter over the past few months. We suspended publication owing to an unprecedented volume of work here at Alpha Partners. Thanks to the many inquiries we received, we are resuming publication with a renewed sense of purpose and dedication. Going forward, please let us know whenever we can address a topic that you may find of interest.

Know Thy Competitors

We were having coffee and some really nice pastries, my client and I, when he asked me this question: “Liz, you always place such heavy emphasis on us knowing our competitors. Why should we care about our competitors? Why shouldn’t we work as hard as we can to provide superior investment returns and excellent client service? How does studying our competitors help us do that?”

He went on to describe the attitude of a top chef he had seen interviewed recently. The chef proudly professed complete disregard for the culinary concoctions of other chefs. My client asked me if the chef was wrong.

At the time, I recall thinking, “Ahh, the investment professional as artiste.” But isn’t the investment world really more like sports, driven mainly by intense competition and all the numbers and statistics that go with that?

His question certainly did have merit, though. After all, it can be counterproductive to dwell on the competition.

Best Practices in Utilizing Competitor Intelligence

Whenever I start working with a client, I always ask about their competitors. Responses vary. One firm recently sent me a complete SWOT report based on analysis of its major and minor competitors. (SWOT stands for Strengths, Weaknesses, Opportunities and Threats.) Another provided a voluminous file. Sometimes I simply receive a well-organized list.

Very often, however, I am told, “No, we don’t track our competitors because (a) we don’t have time, (b) we have so many competitors that such information is not really relevant (this most often from value equity managers) and (c) the consultant won’t tell us who our competitors are so it doesn’t matter anyway.” And then, of course, there is this notion of the business professional as artiste, toiling away in his or her own private patch of excellence where nothing matters but getting it right for the sake of clients. This approach is validated by well-regarded marketing experts and is particularly well articulated by Jason Fried and David Heinemeier Hansson in their 2010 book, Rework.

I have thought about my client’s question for some time now, and I think I finally have a clear answer grounded in when competitor intelligence works (uses) and when it retards effective action (abuses).

Uses

Sharper competitive differentiation through awareness. Most investment managers look and sound alike. The investment manager who understands this based on a study of its competitors is in a better position to stand out — either through emphasis on genuine competitive advantages or through stronger storytelling or, ideally, both.

Confidence based on preparedness. Business can be won or lost given how an investment firm answers a question, and the questions may well depend on who is competing for the same slot. So why wouldn’t you want to know everything you can about your competitors’ identity, strengths and weaknesses? Such information may result in your being just that much sharper in answering a question. The main thing, however, is that simply by knowing as much as possible about your competitors, you are more likely to walk into a competitive situation (a finals, say) with a sense of confidence.

Understanding where your strategy fits in a portfolio. Along with the dictum, “know thy competitor,” I have also always preached, “know thy client,” and some of our industry’s most successful professionals operate precisely at the intersection of competitor and client knowledge. These professionals make it a point to know how their strategy can contribute to a client’s total portfolio. To know this, they must understand the competitive landscape and where their investment strategy fits within it. Is their strategy a core holding or a complementary allocation? Or could it be either, depending on the potential client’s specific needs? Investment firms often tell me that such knowledge by definition resides with consultants. As in so many other areas, this cedes too much power to consultants. Most consultants are smart, hardworking people, but it’s not their job to market your strategy effectively.

Abuses

Copycat interpretations. The biggest abuse of competitor intelligence is using it merely to copy. By “copy” I don’t mean studying what works and doesn’t work, seeking to learn from competitors’ successes and avoid their mistakes. I mean the complete lack of originality that expresses itself in the statement, “We want one … exactly like that!” — be it a web site or a presentation book or a thought leadership program. This desire to imitate may be why investment companies often use precisely the same imagery (gears, a globe, a chess board, Greek columns, people shaking hands, puzzle pieces coming together, a magnifying glass, compasses and other navigational devices) as well as the same language in their marketing literature. In brochures often entitled “The XYZ Company Difference,” client service always seems to be “unparalleled” while dedication to investment excellence almost invariably is “unwavering.” When confronted with such massive sameness, clients can be forgiven any tendency to make decisions based solely on short-term numbers.

Obsessing about the wrong things. Knowledge of competitors should serve as context. It should not become a distraction that takes focus away from what matters: meeting clients’ investment and service needs. At certain points in the evolution of your company as a business, for example, you might be better off researching investments than researching competitors.

Statements that cannot be proven. I counsel my clients to be ready with answers to any questions about competitors but never to mention competitors explicitly. My rationale is that in most situations investment firms cannot know everything about their competitors, so why risk an inaccurate or naïve statement. (A new war story in this issue, however, describes a new business win for a firm that aggressively positioned itself as the best solution relative to two specific competitors.)

Since considering my client’s question, I’ve had the good fortune to work with a number of former professional athletes. These professionals always provide me with a wealth of competitor intelligence. They see limited information or many different competitors as challenges to be met as opposed to a rationale for indifference. So yes, to a limited extent, I buy the concept of the investment professional as artiste. Absent the abuses noted here, however, the investment professional as athlete — securing every available piece of information to compete more effectively — makes a whole lot more sense.

A New War Story

Here is a true story told by one of our clients who manages a fund of funds:

“One of the managers in our funds recently won a significant mandate by demonstrating exceptional knowledge of its competitors. There were three firms competing for the business: Companies A, B and C. Our funded manager, Company B, was the second to present out of the three. Company B opened its presentation by saying, in effect, ‘We understand that you just heard a presentation from Company A. Company A told you this, this and that about its competitive advantages. Now here’s the part of the equation that Company A is missing.’ In closing, Company B said, ‘You are about to hear from Company C, who will tell you that, that and this. What’s wrong with Company C’s approach is the following … Our investment approach, by contrast, solves for the shortcomings of both A and C.’

The potential client, who had planned to split the mandate, decided instead to award all the assets to Company B. The client described Company B’s presentation as postdoctoral in its sophistication compared to preschool and elementary school efforts by A and C. By aggressively describing its competitive strengths, B demonstrated a more detailed, nuanced, in-depth knowledge of the asset class where it competes for returns.”

Would we recommend this exact approach to one of Alpha Partners’ clients? Not exactly. We recommend against specific references to competitors. We would, however, recommend that presenters tell a story so embedded in competitor knowledge that they get the same message across — sophisticated knowledge of the competitive landscape — without explicitly mentioning competitors by name.

For more about real-life wins and losses, please visit War Stories.

Rework

“Focus on competitors too much and you wind up diluting your own vision. Your chances of coming up with something fresh go way down when you keep feeding your brain with other people’s ideas.”

— From Rework, by Jason Fried and
David Heinemeier Hansson

I started reading Rework for its perspective on competition. But I finished reading it for many more reasons. Consistent with its title, Rework inspires readers to rethink old approaches to practically everything in business — from the need for a detailed plan to the dubious glory of workaholism. If you want to start a company, or if you simply want to work more effectively, Rework is a great read.


Rework provides inspiration for anyone who wants to be more effective in today’s business world.

Questions? Comments? Dissent? Click here.

Click here for other issues of Excess Returns.

© 2012 Alpha Partners LLC Alpha Partners LLC
Marketing for Excess Returns®
1062 Oakridge Road South | Park City, UT | 84098

You are receiving this newsletter as a member of the investment community. If you no longer wish to receive it, please respond to this email with “No More Penguins” in the subject line. To subscribe to this newsletter, send an email with your request to info@alphainvestmarketing.com. Your privacy is important to us. We will never rent, sell or share any information that you provide.

Everything and the Kitchen Sink

Excess Returns

Monthly insights for investment marketing and sales professionals

November 2011

Why are so many presentation books for institutional asset managers so bad? These books are designed to guide, inform and serve as a tangible record of new business and client presentations representing millions in revenue. Everyone understands how important they are. Everyone works very hard on them. Why then do most books look alike, sound alike and suffer from the same obvious flaws? By understanding the many answers to this question, investment firms can move closer to an enduring solution.

With best wishes,

Liz Hecht
Founder, Principal and Director of Research

Print a PDF of this newsletter

Volume 1 | Number 11

In This Issue

Everything and the
Kitchen Sink

The Entropy Factor

The Cost of Verbosity

Alpha Partners is an investment marketing firm specializing in research and presentation strategy. Our goal is to create alpha (excess returns) by helping investment firms win, keep and diversify assets under management.

Alpha Partners LLC
435.615.6862

www.alphainvestmentmarketing.com

Everything and the Kitchen Sink

Recently a prospective client called our firm asking about one of our primary capabilities: presentation strategy. The prospective client tells me that her boss is interested in improving her firm’s new business presentation. Her firm recently lost a significant piece of business and consultant feedback points to the presentation as the principal reason for the loss.

So I ask, as I always do, “What do you mean by presentation? Do you mean the story itself, how you tell the story in person, the story told by the book, the way the book looks or all of the above?” “Oh, the book,” she said, “the book is fine. We have done a lot of work on our book and we are very proud of it. We do not want to make any changes to our book. We want to improve the way we tell the story.”

What she means is the way her team tells the story using the book. If the presentation is ill, we know from experience, the disease often originates in the book. In the due course of time, she sends us the book and I am dismayed to see that it is dreadful, even more so than most. It is so dense with competing information that, if there is a good story, no one, even the presenters themselves, is likely ever to find it.

This happens all the time: people tell me they have a problem with their presentation but their book is just fine. And, as with any serious disease, one must first diagnose the cause before prescribing a cure.

Root Causes of Bad Books

In a spirit of solving the problem by understanding it, let me put forward a few key reasons why these books so often fail to achieve the desired effect.

1.

The relationship between importance and complexity. The more important something is, the more complex it becomes. A lot of people, often with strong opinions and competing objectives, become involved in the creation of these books. The result of too many cooks rarely is what the original chef intended. In fact, many books begin to have a certain everything-and-the-kitchen-sink feel that is completely at odds with their desired effect. One even sees individual book pages that look like they were created by a hoarder. A single page, for instance, might try to explain its primary meaning in three different ways and in three different places: the title, the subtitle and what is sometimes known as a “strap line,” which looks like a giant footnote at the bottom of the page. And this does not even include all the bullets and sub-bullets and yes, even sub-sub-bullets. Investment firms frequently invoke the tenet “less is more.” But they rarely live the reality of this tenet when creating their presentation books.

2.

The challenge of fulfilling a dual purpose. A presentation book often is sent ahead or left behind. So investment companies feel compelled to include all those bullets, thereby forcing presenters to repeat information because there is nothing left to say that is not already on the page. As dramatized in a war story on our website, however, information overload flows from a legitimate fear that decision-makers will decide that less is not more but, well, less. In our practice we have seen hyper-minimalist books providing so little information that the presenting firm might be perceived as lacking in substance. When the book must stand alone, there is a point where too much information causes a reader to shut down. But it also still is possible to provide too little information.

3.

The philosophy-process-people-performance formula. All investment managers must present consistent with this formula. It is required and expected, and it makes a lot of sense. But in implementing this formula, investment firms frequently achieve merely formulaic results. It is a difficult art to stand out from a crowd of competitors while at the same time checking all the required boxes.

4.

The myth of the secret sauce. We often hear stories that are much more interesting than the story told by the book. When we ask about this discrepancy, people sometimes tell us that they do not want to give away “the secret sauce.” Here again, there is a happy medium between providing too much information and so little information that potential clients might suspect that you are hiding something or, perhaps worse, that you lack any real competitive edge.

5.

Fear of linearity. Many of these books include investment process maps with so much detail that it is impossible to connect the parts to one greater whole. When we try to communicate the process in a few simple, linear steps, we are told that “It isn’t that simple in real life. One step does not follow another like that. What we do doesn’t really fit what it says here.” This fear of oversimplification, while certainly valid, tends to result in unnecessary complexity. “Of course,” we tell our clients, “we know it’s not this simple; this minimalist, linear process map is merely a representation to facilitate understanding. Everyone knows that the full complexity of your investment process cannot be captured on one page. But the main thing is to be clear.” A clear visual depiction of your investment process sends the following vital message: “Our process is repeatable and therefore our performance is repeatable.”

Did I tell our new client that we thought her book was in need of an overhaul? Yes, eventually and with considerable tact supported by specific examples of potential improvement. After all, if I was her doctor and she told me she was fine when I knew she had cancer, I would be duty bound to correct her. Is this overdramatizing a bit? Yes and no. A bad book won’t kill you, but it might very well contribute to the death of your business.

The Entropy Factor

Years ago my partners and I had a fun meeting with a group of communications professionals who wanted to recreate their firm’s presentation books. Their current books were long, dull and probably very difficult for presenters to use. Once upon a time, they told us, these books had been really good, before migrating to their current unwieldy state. When asked why the regression, they said, “Oh, you know, the entropy factor.” Ahhh … we all said laughing, the entropy factor. Entropy, broadly defined, means “a process of degradation or a trend to disorder.” Here is what “entropy” means in the world of investment presentation books: doing the same thing over and over again without knowing why, thereby perpetuating a state of randomness and chaos in a document that should exemplify deliberation and order. Entropy is what happens when page after page is allowed to proliferate with no guiding authority to say, “Wait, why exactly are we adding this page?” Entropy is what happens when you ask, “Why are these pages here?” and someone answers “Because they’ve always been here.” Entropy results from the belief that everything should be included just in case, even though many of those pages are no longer germane. In sum, entropy is total lack of relevance supported by habit as opposed to best practice.

The Cost of Verbosity

The failure to streamline and simplify presentation books may have another negative impact that investment companies are only just beginning to consider. According to an October 18, 2010 article in Pensions & Investments, RFPs increasingly are asking firms about their carbon footprint (“Some RFPs Ask Firms How Green They Are”). Investment companies are becoming environmentally friendly for a number of reasons. These include genuine concern about the environment as well as concern about their reputations. P&I also notes that “institutional investors are beginning to incorporate environmental risk factors into their asset allocation processes.” In light of this trend, do you really want to be the firm that shows up to a finals with an 80-page book?

Questions? Comments? Dissent? Click here.

Click here for other issues of Excess Returns.

© 2011 Alpha Partners LLC Alpha Partners LLC
Marketing for Excess Returns®
1062 Oakridge Road South | Park City, UT | 84098

You are receiving this newsletter as a member of the investment community. If you no longer wish to receive it, please respond to this email with “No More Penguins” in the subject line. To subscribe to this newsletter, send an email with your request to info@alphainvestmentmarketing.com. Your privacy is important to us. We will never rent, sell or share any information that you provide.

© Alpha Partners LLC, 2002-2025