The Grumpy Investor: Part II

Fund Management is hard work. We all know this. From a product perspective, fund managers are judged everyday on performance. From this side, the industry is very egalitarian – “the scoreboard doesn't lie” – and the competition is fierce. Managers are competing against themselves, other managers in the same asset class, and even other asset classes.

Although the product side is hard work, at least it is transparent. A manager will usually know why she under or outperformed. The business side is often just as tough, if not tougher, because of the lack of transparency.

It is not always apparent why someone does or does not invest. Is it something the fund is doing that is not attracting investors? Or, is it just you? Is the communications process sloppy? Are the marketing materials not correctly representing the magic? What is really going on?

Although it is near-impossible to understand what is going on inside the allocator’s mind, it is easy to run yourself through your own sales process and have a hard look at what the experience looks like.

I was speaking to the grumpy investor the other day, and he started ranting about a few things that grind his gears that are easy to change:

tl;dr

Too Long; Didn't Read. Ever notice that the emails that linger in your inbox are the ones that are too long? He doesn't even bother. Emails should be punchy and to the point. Two to three paragraphs are plenty, but still exhausting. “If the manager can hook me here, I will read the presentation. If I like the presentation, I may agree to a conference call.”

What’s your number?

It is exhausting to have to look for contact details. If you want me to contact you, make it easy and put contact details almost everywhere, including your signature in email replies.

Manage me

I have a lot of things to do. There is an art between being pushy and being helpful. A skilled salesperson manages the "buying process" for me. An unskilled salesperson can be downright annoying or lazy.

Don't forget about me

Most of the fund management industry is filled with amateur sales people. In other words, sales is not their core competence. It is truly remarkable how many managers don't follow up after a meeting or don't put an investor on a distribution list. On the flip side, it is equally remarkable how many factsheets the grumpy investor receives that he didn’t ask for and which don’t interest him.

Stop with the 'Security Clearance'

“I really don't care what you invest in, but I do want to know why. You could give me the secret recipe to make Coca Cola, but I would still prefer to pay someone else to make it (because it isn't my expertise). Although we accept that some things may be trade secrets, most are not. If you can't be straight with me, I won't invest.”

Empathize with your potential investor

Although most of these things can be corrected within minutes, it probably makes sense to do an audit of the sales experience. How do you rate as an asset manager in terms of sales and customer service? A very simple example: A good sales person at a department store will let you wander around with very little harassment and will approach you if you look at them directly. A poor salesperson is the one that follows you around the floor, starts directing you to random things, doesn’t listen correctly to your requirements, doesn’t know the product offering, or isn’t even there.

Take this into perspective with an asset manager: What does the first call look like? The first email? The presentation? The follow up? Every time someone comes in contact with the firm, is it business friendly, understandable and interesting?

There can only be one Soros, one Buffett, and one Robinson. They are all brilliant investors and great marketers (whether they care to admit it or not). Many managers, although equally brilliant, get the mix wrong. We think that this is mostly because the owner of the business is the fund manager, who is interested and competent in investing and less so in running a business (a different skill set).

As with most things, it is far too easy to judge others and much harder to judge yourself.

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