Thoughts

The One Question to Ask Passive-Leaning Advisors

Posted by Mike McLaughlin on Jan 26, 2011, in Thoughts , tagged with , , ,

Second in a series of posts on the sales and marketing implications of the ongoing debate between active and passive management.  Read the first here.

A client came to us with an issue – internal wholesalers were repeatedly encountering the same objection when discussing the firm’s emerging markets products with advisors.  The objection:  I use index products for emerging markets exposure.

We suggested a number of ways to address this objection with facts (more on those later this week).  But given the relative inexperience of many internal wholesalers, we suggested that they pose the objecting advisor a simple question:

Do you use actively-managed products anywhere in client portfolios?

Why is this type of question effective?  Two reasons:

  1. If the answer is no, the wholesaler immediately knows that there’s not much point in further engaging the advisor.  No further, unnecessary investment of time by anyone.

  2. In the more-likely scenario where the answer is yes, the wholesaler can open up a conversation on the criteria the advisor uses in evaluating active products.  The discussion becomes advisor-centric, not product-centric, and sets the table for the wholesaler to better position the firm’s products.

So much of the active vs. passive management discussion is one that revolves around analytics and data.  And for good reason.  However, for firms dealing with this discussion in day-to-day field and phone interactions, it’s best to first focus on the client.

Designing a Market Research Plan

Posted by Anu Heda on Jan 21, 2011, in Thoughts

Often, we’re asked about market research.  The research idea is usually tied to an initiative that brings something new to a firm’s clients.  That initiative can be a new investment vehicle, marketing message, Web site, or something else.

I sat down with a career researcher recently to share perspectives on the best and worst client engagements.  Though her experience is exclusively with consumer products and ours is traditionally with intermediaries, we agreed wholeheartedly on three dimensions to great research:  … [read more]

Active vs. Passive Management Debate Rises Again

Posted by Mike McLaughlin on Jan 21, 2011, in Thoughts , tagged with , , , ,

We’ve been asked to address the evergreen debate of active management vs. passive management with several clients of late.  Why?  Many firms with actively-managed mutual funds are experiencing challenges in specific parts of their product lineups (e.g., emerging markets, domestic large cap, etc.), leaving Sales and Marketing execs to answer:

  • How should our wholesalers handle the discussion with an advisor who is using (or considering) index products?
  • How can we counter an advisor’s move toward passive vehicles in our print/online messages?

Over the next week, we’ll use the blog to cover some of the answers we’ve come up with, including:

  • The one question wholesalers should ask advisors who say they use passively-managed products
  • The underlying complexity of investment indices
  • The sometimes imperfect construction of indexed investments

We’ll also cite some of the better research-driven arguments we’ve seen that can help distributors of actively-managed products with this challenge.  Stay tuned…

Making The Most From Capital Introduction

Posted by Anu Heda on Jan 13, 2011, in Thoughts

Last week, I met with Sales executives at 6 different prime brokers.  Among the numerous topics we discussed (reporting, securities lending, etc.), capital introduction process was at the forefront.

The cap intro teams do not have the skill set and/or resources to revamp and improve each hedge fund’s presentation.  Here are two topics for hedge funds to consider:

  • Improve the pitch book.  We’ve written about that here.  Additionally most capital introduction folks will offer a dozens of ideas during a 20-30 minute conversation.  We recommend using that conversation time to take notes and apply the most relevant ideas to your materials.
  • Learn by example.  Most prime brokers have an inventory of hedge fund materials.  While they may not share those materials, ask for examples from successful hedge funds.  A good question would be to inquire about funds with similar strategies and similar target markets.  For instance, “In your experience, what are the most crucial selling points to make when selling an event-driven strategy to family offices?”

Most materials benefit from numerous rounds of revision.  These two tips enable hedge funds to begin at a better point than staring at an empty PowerPoint document after-hours.

Social Networks Replacing CRM? Stop the Hype.

Posted by Mike McLaughlin on Jan 10, 2011, in Thoughts , tagged with , , , ,

Socialware, a company that provides automated monitoring and archiving of enterprise social media use, maintains an interesting blog.  Good, relevant ideas without being overtly self-serving.  I especially like the $100M Tweet.

One recent post touched on an idea that, at first, struck me as solid:  social networks become the new CRM system.  Instead of having/using a wholly separate tool, why not have the CRM be the tools everyone already uses?  In other words, use the contact and personal information (job history, interests, people they know) captured by Facebook and LinkedIn as your go-to client/prospect database.

I see two problems with the idea:

  • As the post notes, it’s hard to maintain updated information on prospects and clients.  But you know what – it’s no slam-dunk for people to keep their social media profiles and information up to date, either.  The problem of inaccurate information is not necessarily solved.  More importantly…
  • The main value of CRM lies in combining contact information with all sorts of proprietary knowledge.  No social network is going to log past business deals, Web site activity, and when you last saw somebody.  At least not yet.

In fact, it’s likely that social networks will make CRM tools more important, not less.  Applications like Faceconnector integrate social media information with firms’ proprietary databases.  And firms will increasingly be able to bring this information in-house to build even better client/prospect profiles.

So I don’t believe social networks will be replacing CRM tools.  And I think grand overstatements about social media’s potential provide skeptics the ammunition to resist the legitimate opportunities it presents.