Best Practices in Institutional Distribution - Greenwich · PDF file · 2015-11-09f...

GREENWICHASSOCIATES

Best Practices in Institutional Distribution

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© 2014 Greenwich Associates, LLC. Javelin Strategy & Research is a division of Greenwich Associates. All rights reserved. No portion of these materials may be copied, reproduced, distributed or transmitted, electronically or otherwise, to external parties or publicly without the permission of Greenwich Associates, LLC. Greenwich Associates®, Competitive Challenges®, Greenwich Quality Index®, Greenwich ACCESS™, Greenwich AIM™ and Greenwich Reports® are registered marks of Greenwich Associates, LLC. Greenwich Associates may also have rights in certain other marks used in these materials.

TABLES & GRAPHICS

Direct Sales Best Practices 4

Key Issues Facing U.S. Institutional Investors 4

U.S. Institutions’ Asset Mix of Defined-Benefit Plans and Investment Pool Assets 5

Distribution of Thought Pieces and White Papers 6

Direct Sales Activity Benchmarks 7

Relationship Management Best Practices 8

Greenwich Associates Relationship Model 8

Institutional Client Coverage Ratio 9

Institutional Formal Review Meetings 9

U.S. Client Evaluations Greenwich Quality Index Service 11

Consultant Relations Best Practices 12

Number of Funds Selecting Investment Consultants as Most Important 13

Consultant Coverage Planning Cycle 14

Consultant Coverage Metrics 15

Contents

Next Generation Institutional Distribution 3

Best Practices in Direct Sales 4

Best Practices in Relationship Management 8

Best Practices in Consultant Relations 12

Conclusion – Key Takeaways 16

Strategic Advisory Services 17

GREENWICH REPORT | 3

If ever there were easy times for asset management sales and distribution professionals, those days are

long gone. A series of changes in institutional markets have intensified the competition for investment assets while ratcheting up expectations among prospects and clients.

Many of these changes start with shifts in client needs and demands. The global financial crisis and the subsequent low-yield/low-return environment have forced institutional investors to take a hard look at long-established practices. What many institutions found was an overreliance on equity-risk premium, a sense of overconfidence in traditional single-strategy building-blocks leading to ineffective diversification, and a focus on relative performance that was misaligned with their actual funding needs.

As they work to address these shortcomings and create strategies to meet their funding needs in a tough environment, institutions have become increasingly willing to change how and where they invest. They are looking to investment managers for two things: 1) advice on how to succeed, and 2) new products and solutions.

These changes have important implications for asset management distribution strategies. Appealing to clients in search of strategic advice and new products is a much different challenge than the traditional process of selling products that fit neatly into institutional allocation boxes. Meeting this challenge will require new practices in sales, client service and consultant relations. It will require changes in the behaviors and skill sets of professionals in

all three areas. Distribution teams must give up old transactional approaches in favor of long-term relationship building. Professionals must come to the table with advanced analytical and technical skills, a willingness to listen to clients and understand their needs, and an ability to present the firm’s products in the form of solutions that help clients meet their true goals.

In short, asset management firms need to deploy more sophisticated distribution strategies and discard the traditional product-based model in favor of client-focused, solutions-based approaches. This will require changes to sales, client service and consultant relations business structures and practices. It will also require an upgrade in the overall skill level and experience of distribution personnel.

In an effort to help readers make this transition and improve the effectiveness of their own distribution efforts, Greenwich Associates has assembled 24 best practices across sales, consultant relations, and relationship management based on our strategic consulting work with leading asset managers around the globe.

Managers that adopt these practices will experience several concrete benefits. Successfully establishing the firm as a trusted advisor to clients will make relationships deeper and more durable, minimizing asset and client attrition. Engaging with clients at this level also allows firms to broaden relationships by identifying opportunities for cross-selling, thereby increasing revenue potential. n

Next Generation Institutional Distribution


1. Ensure Holistic Understanding of Prospect Needs

Although it seems obvious to say that asset manage-ment firms need to understand their clients, in truth this best practice reflects one of the most fundamental changes to industry sales practices. In the past, salespeople spoke. Today, they must listen.

This necessary change in behavior stems from the shift from product sales, in which sales professionals sought to convince prospects of the merits and benefits of the product, to a solutions approach, in which the sales professional attempts to help the prospect solve a problem or achieve a goal using the firm’s expertise and products.

In order to suggest effective solutions, the sales professional must have a deep understanding of the organization’s situation, strategy and needs. Below is a snapshot of the many issues facing institutional investors today. To know which of these issues are driving the needs of any prospect, sales teams must do two things: 1) Conduct extensive research into the prospect in advance of any meetings, and 2)

Best Practices in Direct Sales

Key Issues Facing U.S. Institutional Investors

Risk management

Market volatility

Rate of return and funding issues

Asset allocation

Funding rate volatility

Liability

Manager selection

Government regulation

In�ation risk

Liquidity

Internal organization

Governance structure and practices

Note: Based on 756 respondents. Source: Greenwich Associates 2013 U.S. Institutional Investors Study

45%

40%

29%

29%

25%

23%

20%

11%

15%

8%

6%

5%

0% 10% 20% 30% 40% 50%

1 Ensure Holistic Understanding of Prospect Needs

2 Align Sales Efforts to Evolving Client Needs

3 Tier Prospects and Allocate Resources Accordingly

4 Develop Annual Sales Plans for Target Prospects

5 Use Thought Leadership to Deepen Relationships

6 Set Internal “Service” Guardrails

7 Support Service Team for Cross-Selling

8 Measure Activity and Effectiveness Levels

Direct Sales Best Practices


Begin all conversations by asking the prospect for a comprehensive update of the institution’s current situation and challenges.

2. Align Sales Efforts to Evolving Client Needs

More than ever before, asset managers must tailor sales approaches and even sales models to the needs of specific client segments. As illustrated above, asset allocations—and underlying investment strategies—are diverging among corporate defined benefit (DB) plans, publics and not-for-profits. Corporate DB funds are focused on risk reduction, as evidenced by a 35% average allocation to fixed income that far exceeds those of other institution types. Public DB funds are attempting to make up for funding shortfalls by boosting investment returns. Reflecting this priority, they have amassed relatively large allocations to alternative products, with average allocations to real estate and private equity double those found among corporate DB funds. Meanwhile, not-for-profits remain committed to the “Yale Model” and are allocating more than a third of total assets on average to alternatives and other investments.

Given this divergence in approach, asset managers cannot afford to arrange sales coverage by geography or other broad metrics. Rather, they must structure their sales efforts by type of institution, or even investment strategy or approach. Most importantly,

asset managers must build their efforts around the specific needs of clients and prospects, as opposed to their own products and resources.

3. Tier Prospects and Allocate Resources Accordingly

In today’s competitive marketplace, there is no room for inefficiency. Firms must be ruthless in how they allocate resources in sales as in all other business functions. Of course, managers should devote the most resources to their largest prospects and clients, which have the potential to award the biggest mandates. But asset management organizations should adopt a more sophisticated approach to prospect tiering. Along with size, prospects should be tiered based on the alignment of their investment strategies, goals and practices with the philosophy and products of the firm. From there the process is simple: Prospects with both the highest AUMs and best fit with the firm’s investment approach receive the most resources and attention, while prospects that have not demonstrated compatibility with the firm are relegated to low-priority status.

4. Develop Annual Sales Plans for Target Prospects

No prospect considered a promising target should be covered without a detailed client plan for the year. Effective plans start with an analysis of the

U.S. Institutions’ Asset Mix of De�ned-Bene�t Plans and Investment Pool AssetsBy Institution Type

Note: Numbers in parentheses represent respondent counts. Percentages are weighted in U.S. dollars and projected to the Greenwich Associates universe of U.S. institutional investors. Projections based only on the assets of institutions disclosing their speci�c asset allocation. Other investments include multi-asset, commodities, and money market. Results exclude outlier allocations. Source: Greenwich Associates 2013 U.S. Institutional Investors Study

International equities Fixed income Real estate Hedge funds Private equity Other investmentsU.S. equities

0% 25% 50% 75% 100%

U.S. institutions

Corporates

Publics

Endowments & Foundations

Unions

(593)

(306)

(120)

(138)

(27)

26% 29%20% 5% 8% 7%

28% 18% 35% 4% 5% 5%

25% 22% 25% 3% 10%

19% 19% 27% 12% 8%

7%

36% 14%

9%

22%

6%

4%

8%

5%10%

5%

4% 9%


prospect itself, which allows the firm to diagnose the target’s needs. The goal of this effort: Assess potential demand for asset management services and identify firm products that can meet the target’s needs. Once this match is found, the plan should identify decision-makers and influencers the firm will need to win over to make the sale. Next, determine how these decision-makers perceive your firm relative to your competitors. This can be done at a superficial level by identifying the managers and products currently employed by the target and comparing their characteristics with those of your own firm. The plan should also set basic logistical targets including successful telephone outreach, meetings at the target’s offices, etc.

The plan should identify the specific expertise and resources that will be required to effectively present the firm’s products as meeting the target’s specific needs. Among the key questions to answer: Will the sales team need support from product specialists or portfolio managers? The plan should also assess the level of support that can be expected from the target’s investment consultants and determine how or if the consultant should be best leveraged in the sales process. Finally, the plan must reside on some form of client relationship management (CRM) system through which it can be tracked and updated by both the sales professional and sales management. An effective and regularly used CRM is critical to making the annual sales plan a true blueprint that drives the effort throughout the year, as opposed to a document that sits unused on a shelf.

5. Use Thought Leadership to Deepen Relationships

The use of thought leadership strategies to start conversations with new prospects and deepen relationships with existing clients has become standard practice in the asset management industry. The dramatic growth in the number of thought leadership pieces generated each year by asset management firms is shown here. However, many firms underestimate the challenge of deploying thought leadership effectively. More specifically, firms often concentrate their initial efforts on the first half of the process—creating the content—while underestimating the difficulties of the second part—getting the content in front of the right person at the right time.

Part one of the process is not easy, but it is straightforward. An effective piece of thought leadership content integrates two things: 1) expertise directly related to the firm’s products or services and 2) an idea or point of view that makes the piece compelling to readers in the target audience. Part two of the process is much more complicated. Too many firms rely on a broad “push” strategy in which they simply send all thought leadership materials to everyone on a standard distribution list. To be effective, firms must adopt more sophisticated merchandising strategies that ensure the content actually reaches target decision-makers, stands out amid a flood of other materials, and provides a timely notification of interest in a topic to the relevant sales professional. Employing the right technology is critical.

6. Set Internal Service Guardrails

Service guardrails are codified parameters that define expectations for client service. At a minimum they should include set response times for both standard informational inquiries and requests for more customized research. Service guardrails should also establish an acceptable framework for the involvement of portfolio managers and other members of senior management or the investment team. These guardrails serve two critical purposes: They define internal targets for turnaround on client

Distribution of Thought Pieces and White Papers

2011 2012

25th PercentileMedian75th PercentileAverage

0

10

20

30

40

Num

ber

of T

houg

ht P

iece

s

The average number of thought pieces increased by almost 50% last year.

Note: Thought pieces and white papers are any insightful commentary on the economic environment and strategic solutions. Source: Greenwich Associates, Competitive Challenges, 2013.

38

18

27

107

15

26

19


requests and for resource allocation to the account, and they ensure that client expectations are realistic and align with the firm’s policies and practices. To this end, the timelines and resource allocations laid out in the internal service guardrails should be communicated in some form to clients so both sides know what is expected and possible.

7. Support Service Team for Cross-Selling

Cross-selling is essential to the sales effort of any growing asset management firm and is a critical component of a solutions-based approach to the business. However, making a cross-sale to an existing client can be tricky. In all cases, the firm’s first priority must be the preservation of the original business and relationship. Often, that relationship has been transitioned, at least in part, to a relationship management team that is less focused on closing a sale. But introducing or reintroducing a sales professional can be disruptive.

To avoid trouble, firms should approach cross-sales through a formal process. That process starts with a clear set of guidelines for relationship management teams on how to search for and identify cross-selling opportunities by asking clients about their needs and matching those needs to the firm’s products. The guidelines should specify when and under which circumstances the relationship management team should bring in the sales team. They must also extend beyond relationship management professionals and inform the sales professionals about what is expected of them when they are called upon. Primarily, sales professionals must be instructed to work cooperatively with the relationship management team and, at times, in support of the relationship management professionals. The overriding priorities must be the preservation of the original relationship and the presentation of the cross-sale as a genuine attempt to help the client address a specific problem or concern.

8. Measure Activity and Effectiveness Levels

Asset managers must measure the effectiveness of individual sales people rigorously to identify any underperformers and determine what if anything can be done to improve results. The basis of these evaluations will be quantitative data on number of calls, number of visits, number of opportunities identified, number of final presentations, number of wins, and other metrics. The industry benchmarks on these data were collected from Greenwich Associates Competitive Challenges Internal Benchmarking program. These “hard” results will be supplemented with other qualitative factors. Greenwich Associates advises its clients to use measures such as the credibility of the sales professional in communicating the investment process, response times through the sales process and success in building professional relationships. Many firms have begun integrating this type of qualitative assessment into incentive programs by increasing discretionary compensation while reducing traditional commission structures. n

Direct Sales Activity Benchmarks

Source: Greenwich Associates, Competitive Challenges, 2013.

40–50 opportunities

140–170 calls

8–10 �nals

4–6 wins


1. Ensure a Client-Focused Approach to Relationship Management

The graphic below provides a breakdown of the general approaches asset management firms take to client relationship management. In response to changes in client behaviors and expectations, many firms are gravitating to the top two quadrants by adopting a more client-centric philosophy. For firms moving in that direction, there is a simple way to ensure that such an approach actually takes root in the firm’s relationship management practices: Start every client conversation with a discussion of client needs. We recommend requiring relationship management professionals to use some variation of the following language at the beginning of each client interaction: “We understand your current situation to be X, and your current needs to be Y. Is this correct?” Instruct relationship management professionals to utilize the firm’s thought leadership materials to initiate broad-ranging conversations about the client’s concerns. If specific discussions about the firm’s products and services flow from these conversations, clients will find the interaction more interesting and rewarding, which will deepen the relationship and potentially reveal opportunities for cross-selling.

Best Practices in Relationship Management

Greenwich Associates Relationship Model

Narrow Asset / Product Scope Broad Asset / Product Scope

Client Centric

Product / Market Centric

• Thought leadership and dialogue on how to meet client needs within asset classes / product styles

• How mandates support the bigger picture

• “Narrow agenda”

• Thought leadership and dialogue on how to meet broad client portfolio and funding needs

• How multiple mandates or solutions support the bigger picture

• “Broad agenda”

• Thought leadership on speci�c market and product trends

• Thought leadership on a broad range of market and product trends

1 Ensure a Client-Focused Approach to Relationship Management

2 Ensure Staffing Plan Supports Relationship Objectives

3 Develop Annual Plans for Key Relationships

4 Consistently Re-Sell Investment Philosophy/Process/Differentiation

5 Leverage Formal Reviews to Reinforce Understanding of Client Needs

6 Seek to Develop “Trusted Advisor” Status

7 Set Internal Service Guardrails

8 Measure Satisfaction and Engagement Levels

Relationship Management Best Practices


2. Ensure Staffing Plan Supports Relationship Objectives

Of course, asset management firms cannot create strong relationships based on meaningful conversations about client needs without the right level of staffing and resources. There is wide variation in asset management firms’ institutional client coverage ratios. While the average firm has a ratio of 48 clients per relationship management professional, coverage ratios range from approximately 20 to 60. Obviously, such large differences in coverage ratios will result in comparable differences in coverage intensity. As such, a starting point in setting overall firm strategy must be a decision about the types of relationships the firm intends to maintain with clients. The answer to that question will determine how much staff and resources must be allocated to the relationship management effort, and what client portfolio tier can be supported by that level of investment.

There is another key consideration in staffing: New demands for client-focused approaches are raising the bar in terms of the quality of professionals required. In the past, a basic understanding of the firm’s products was probably adequate to deliver effective client service coverage. No longer. Today, many firms are requiring their relationship

management professionals to be CFAs. At the very least, they must be capable of having broad conversations about a range of investment topics.

At all costs, firms must avoid setting unrealistic goals for service relative to staffing and other resource commitments.

3. Develop Annual Plans for Key Relationships

As in sales, all client relationships should be managed with a detailed annual plan. These plans serve as strategic and tactical roadmaps that relationship management professionals and the firm as a whole follow throughout that period. They will also provide metrics against which progress—or lack of progress—can be measured. The first phase of these plans should focus on client analysis, with the goal of answering the following questions:

• What is their asset allocation? What products do they use?

• What other managers do they use and what do they think of them?

• What are their investment goals? What portfolio-wide issues are they confronting? How does our mandate support overall goals?

• Who are the key people on the client side? Who are the decision-makers? Who are the influencers?

The second phase of the plan should provide strict guidelines for coverage, with a special emphasis on internal cooperation across firm functions. The plan should provide relationship management teams with clear answers to these questions:

• What do I need to do to prepare for the client meetings? Does the client have specific concerns?

• Will I need PM or Product Specialist support?

• Are there cross-sell opportunities?

• What do their consultants think of us?

Institutional Client Coverage Ratio

2012

25th PercentileMedian75th Percentile

Institutional Formal Review Meetings

0

10

20

30

40

50

60

Clie

nts

per

prof

essi

onal

Source: Greenwich Associates, Competitive Challenges, 2013.

20

32

57

20120.0

0.5

1.0

1.5

2.0

Mee

tings

per

clie

nt

1.0

1.3

1.9


Annual client relationship plans must reside on internal CRM systems that allow relationship management professionals and management, the sales team and senior management to understand the requirements and track progress for each client.

4. Consistently Re-Sell the Investment Philosophy and Process and Reinforce Points of Differentiation

In truth, providing excellent client service and seamlessly meeting clients’ needs are merely means to an end: deepening the client relationship to make it more durable and lucrative. Too often, this ultimate objective gets lost in the rush of day-to-day service demands. It’s important to remember that fund executives often work with scores of other managers. Also, turnover in fund staffing means that the person you are talking to might not have heard your firm’s formal sales presentation and, in fact, might not know much about your firm at all. To that end, management should equip relationship management professionals with training and materials designed to ensure that every client interaction advances the following goals:

• Improve clients’ perceptions of the firm on key success criteria.

• Distinguish the firm from other investment managers.

• Enhance client confidence that they were wise to choose the firm.

• Establish a broader agenda, and trust and credibility in a different set of capabilities.

5. Leverage Formal Reviews to Reinforce Understanding of Client Needs

Whether they are held annually or more frequently, formal reviews are a critical opportunity for the firm to update its knowledge of the client and to gain a deeper understanding of the client’s needs. While the client will be looking to your firm to present an update of the relationship and the investment strategy, it is essential that the client also do his or her share of the talking. These meetings represent a critical opportunity to gain information and insights

about the client’s situation that can and must be used to inform sales and client service interactions throughout the year.

6. Seek to Develop “Trusted Advisor” Status

Firms that succeed in building a solutions-oriented philosophy within their organizations have the opportunity to position themselves as true advisors to their clients and thereby gain the benefits of more durable relationships and new opportunities for cross-selling. The biggest asset management firms have institutionalized this effort by building Strategic Advisory Groups with the sole mission of building deeper relationships with clients by providing insights and advice.

Of course, deploying such groups is probably beyond the resources of most firms. That doesn’t mean that mid-size and smaller managers should forgo the idea of trying to win “trusted advisor” status. Firms of all sizes can bring together resources from investment, sales, relationship management and senior management to provide solutions to the firm’s most valuable partners. For multi-product firms, this advice might include asset allocation and other portfolio-wide topics. Boutique and specialist firms can position themselves as trusted advisors by providing insights within their area of expertise but beyond the scope of the investment mandate.

7. Set Internal Service Guardrails

One of the most important aspects of managing client relationships is managing client expectations. Unfortunately, it is all too often also one of the most neglected. In the end, client satisfaction will not be determined by how well relationship managers and client service teams function on some absolute level. Rather, it is determined by how well service measures up to what the client was expecting. To that end, setting realistic expectations at the outset is just as important as delivering high-quality service throughout the course of the client relationship. Establishing internal “guardrails” that codify turnaround time and other expectations for the relationship management function will ensure that clients know what to expect from the firm, and that internal professionals know what is expected as well.


8. Measure Satisfaction and Engagement Levels

It is not enough for asset management firms to monitor levels of client satisfaction. Although broad gauges of satisfaction might be helpful in identifying at-risk accounts, they offer little in the way of insight on how to remedy problems. In addition to overall levels of satisfaction and engagement, managers should maintain quantitative measures of the capabilities of the relationship manager, the quality of the firm’s written materials, effectiveness of formal reviews and other factors.

Clients do not judge your firm in a vacuum. Instead, the quality of service you deliver will be assessed relative to that provided by other managers. For that reason, the only way for a manager to obtain a true picture of where the firm stands with its clients is to obtain measures of client satisfaction in key categories from an objective external source that can also provide comparative data from competing managers. This scatterplot shows how Greenwich Associates informs managers about their relative positioning with clients by plotting their quality ratings against those of competitors. n

U.S. Client Evaluations Greenwich Quality Index ServiceGreenwich Quality Index Service 2013 – Evaluations by U.S. Institutional Investors

Note: Results are based on 1,277 interviews with U.S. institutional investors in 2013. Greenwich Quality Index scores range from 1,000=”Excellent” to 0=”Poor” with a population mean of 500. Quartiles are based on managers with 5 or more client evaluations. Source: Greenwich Associates 2013, USII-13

Greenwich Quality Index Service 2013

Nu

mb

er o

f C

lien

ts E

valu

atin

g

350 400 450 500 550 600 6500

10

20

30

40

50

60

70

804th Quartile Median 1st Quartile


Best Practices in Consultant Relations

1. Ensure High-Caliber Consultant Relations Staff

When it comes to job requirements, the bar has always been high for consultant relations professionals. Consultants are a sophisticated group, and professionals assigned to cover this segment must be capable of holding in-depth conversations on subjects spanning investment products, the market landscape and the consultant industry. Above all, consultant relations professionals must be able to present the firms’ investment philosophy and process at a very high level.

Securing individuals with this level of investment knowledge and industry experience requires significant compensation, and managers are strongly advised to find other areas of the firm in which to save money. Because it is essential for managers to

maintain long-term relationships with each important consulting firm, consultant relations compensation structures should include discretionary components that reward professionals for progress in relationship-building over the course of the year—even if those activities are not connected with any new sales or assets.

2. Adequately Staff Team to Meet Firm Objectives

As in all client segments, coverage strategies for investment consultants should be a function of firm goals. At the same time, however, although it is not uncommon for smaller asset management firms to use institutional sales teams to cover consultants, dedicated consultant relations groups are increasingly the norm. As a result, consulting firms have come to expect very high levels of service coverage in terms of both intensity and sophistication. Given the demands placed on sales teams, many will struggle to deliver this level of service to consultants. As a result, managers that identify consultants as an important channel for new business should be prepared to make the significant investment required to establish a dedicated consultant relations function.

3. Rigorously Tier Investment Consultants

Not all consultants are created equal. The top 10 consultants in the U.S. control 60% of institutional assets and relationships. In the U.K., the top three consultants control nearly 70%. These numbers show why the consulting channel is so critically important to managers and why an effective consultant relations function is a must-have for most managers. But these figures also show the need for focus in coverage strategy. Senior management must be involved in the process of screening and tiering consultants in importance and ensuring that the firm is assigning sufficient resources to the top consultants on that list. Of course, absolute levels of assets or clients are not the only factor to consider. Specialist consultants are playing a bigger role in institutional investing, and

1 Ensure High-Caliber Consultant Relations Staff

2 Adequately Staff Team to Meet Firm Objectives

3 Rigorously Tier Investment Consultants

4 Use Thought Leadership in Partnership with Consultants

5 Build Deep Relationships Up and Down the Org Charts

6 Service Consultants like Tier-1 Clients

7 Create Firmwide Approach for Addressing Consultants

8 Consistently Measure the Effectiveness of Consultant Relations

Consultant Relations Best Practices


specific firms will have disproportionate influence in alternative investment products and other areas. The key for managers is taking the time at the outset to identify the consultants with the most potential to deliver assets to the firm and making sure the manager’s best and most talented professionals are covering those consultants.

4. Use Thought Leadership in Partnership With Consultants

Thought leadership materials can be particularly effective with investment consultants for two reasons:

1. Even more so than investment managers, consultants are constantly in search of fresh thinking and ideas to share with clients and prospects;

2. Although investment consultant professionals are generally sophisticated, they also usually lack the direct investment expertise and experience of portfolio managers and other investment professionals at asset management firms.

These two factors combine to create real demand among consultants for thought leadership materials—but only those materials that actually provide insights that can inform their own work and engage clients. Thought leadership materials for consultants must convey an interesting point of view and cover a relevant topic. Distributing bland or unhelpful content is not only ineffective, it is counterproductive in that it can actually have a negative impact on the consultants’ perceptions of the firm. This is especially the case if the manager is using a crude distribution strategy. Being branded a “spammer” can ruin a manager’s reputation. Management firms should evenly divide their thought leadership budgets between content production and sophisticated distribution strategies that deliver the right content to the right people at the right time.

5. Build Deep Relationships Up and Down the Org Chart

One mistake many management firms make is to rely on relationships with field consultants as sole points of entry to important consulting firms. Although this strategy is understandable given the time demands on consultant relations teams and other professionals,

Number of Funds Selecting Investment Consultants as Most ImportantU.S. Investment Consulting Business 2013

Note: Based on 731 respondents in 2013. Source: Greenwich Associates 2013 U.S. Institutional Investors Study

Relationships cited “most important”

Cumulative relationships

Mer

cer

Hew

itt E

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NEPC

Cam

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Calla

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Russ

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Sum

mit

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I Inv

estm

ents

Mek

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CAPT

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DeM

arch

e

Wur

tsRo

gers

Case

y

0

20

40

60

80

0%

20%

40%

60%

80%Top 10 “Most Important”

60%


firms that adhere to this approach leave themselves at risk. Turnover rates are very high in consulting, and managers can quickly find themselves rudderless with the departure of a single field consultant. As a result of high turnover rates, junior staff at consulting firms can quickly become senior personnel.

For these reasons, managers should attempt to build relationships wherever possible throughout the target consulting firm. That includes individuals up and down the org chart from junior field consultant to CEO and also encompasses asset class and product specialists, heads of research, and local staff on the ground in foreign markets. Of course, executing such a strategy often will require assistance from other areas of the firm—especially the investment staff and senior management. Top management can interact as peers with consultants’ senior staff, management and even ownership. It is the responsibility of consultant relations teams to identify opportunities to bring these groups together, and to quarterback the strategy for building and deepening the overall relationship.

6. Service Consultants Like Tier-1 Clients

Because of the huge amounts of assets and client relationships they control, big consulting firms are more valuable to your firm than even some of your biggest clients. That means managers should be devoting as much or more resources to consultant coverage as they do to direct sales. Managers must demand consultant relations teams deliver best-in-class levels of responsiveness and transparency—two factors that play a huge role in determining consultant perceptions of the firm. Finally, although this point might seem obvious it bears stating: Invite important consultants to visit your offices as frequently as possible, and when they arrive, roll out the red carpet. Ensure that senior management, portfolio managers and other key individuals at your firm are on premises and prepared to make the best possible impression.

Senior management must allocate sufficient resources to support the organization’s goals relative to consultant coverage to ensure success.

Consultant Coverage Planning Cycle

1

4

2

3

Individual Account Strategies

Identify Consultants’ Research Needs

Identify Decision-makers to be Targeted

Identify Influencers to be Targeted

Set Annual Goals for Meetings, Searches and Finals

Estimate Support Required from IM Staff, Senior Management and Others

PrioritizeIdentify

Top Priority Consultants

MonitorMonitor and

Measure Progress Against Objectives

PlanDevelop Strategies, Define Goals, Identify Resource Needs

ResourceAggregate Plans and Allocate Resources to Meet Objectives

1

2

3

4

5


7. Create A Firmwide Approach for Addressing Consultants

All of the recommendations presented in this section so far are important steps managers should take to create an effective consultant relations function. The challenge facing managers is how best to assemble these capabilities and approaches into a comprehensive coverage strategy. Managers should follow the planning process illustrated on the previous page for both the consultant segment as a whole, and for individual organizations. The key elements of this process: ranking consultants in terms of coverage priority, creating plans to build relationships by meeting targets’ needs, allocating appropriate levels of resources, and monitoring progress.

8. Consistently Measure the Effectiveness of Consultant Relations

Due to the importance of the consultant channel, it is essential that managers consistently measure their performance in covering consultants and their standing among consultants relative to other asset managers. To do so effectively, managers should monitor the key internal and external metrics presented here. In order to access objective data that enables them to benchmark their performance against those of other managers, managers should utilize independent, third-party sources such as Greenwich Associates. n

External

• Capability of consultant relations professionals

• Capability of non-consultant relations professionals

• Provision of complete and current written information

• Responsiveness to general requests for information

• Usefulness of formal review meetings

• Usefulness of conversations outside of formal presentations

Internal

• Consultant coverage ratio

• Meetings per consultant per year

• Meetings per search inclusion

• Meetings per finals presentation made / won

• Percent of consultant searches resulting in finals made / won

• Consultant relations expense as a percent of total operating expenses

Consultant Coverage Metrics


As asset management firms attempt to compete in a fast-changing and increasingly competitive market, there is little room for error. To win and preserve assets in today’s institutional marketplace, managers need disciplined distribution strategies based on the following five best practices:

1. Clearly Define and Articulate a Differentiated Value Proposition.

Asset managers must commit to a strategy built off of their core competencies and communicate their differentiated value proposition clearly to investors.

2. Develop Deeper Advisory Relationships.Investors’ need for strategic advice is an opportunity to deepen relationships with clients by adding value beyond the constraints of the traditional investment mandate and diversifying the business model away from a reliance upon alpha generation.

3. Align Offerings to Meet Evolving Investor Needs.

Investors have been caught between the desire to de-risk and the need for returns and, as a result, the ability of asset managers to understand client needs and tailor products accordingly is more critical than ever in driving success.

4. Market Next Generation Products.Asset managers should leverage their existing base of knowledge and skills to develop products that meet specific client needs within their addressable market channels.

5. Monitor Results.Asset managers cannot afford to rely on asset inflows and outflows to let them know how well or poorly their distribution strategies are functioning. To ensure success, managers must consistently monitor key metrics of client—and consultant—satisfaction and engagement and understand how their firm measures up against the competition. n

Conclusion – Key Takeaways


Our Consultants

Marc HaynesMarc is the leader of the Firm’s global Investment Management practice and is also responsible for managing relationships with a number of leading

asset managers, investment and benefit consultants and DC pension providers in the U.K. and Europe. He has deep experience serving CEOs and their leadership teams on a wide range of growth and distribution issues and in addition to providing consulting around Greenwich Associates regular benchmarking services, Marc has led recent advisory engagements in global opportunity assessment, business strategy development and product messaging. Marc oversees the Firm’s work with investment consultants globally and also leads the Firm’s defined contribution research in the U.K. Marc frequently delivers keynote presentations at industry conferences and is often quoted in mainstream and industry publications.

Before joining Greenwich Associates in 2008, Marc headed up the life and pensions investment business at Friends Provident in London, where he set the strategic direction for its investment proposition, controlled its fund platforms, supervised a group of external investment management firms, and managed its flagship fund of funds portfolios. Previously, he held a number of distribution roles at Schroders. Marc received his MA in International Business (first-class honors) from the University of Edinburgh.

Strategic Advisory Services

Our Strategic Advisory team helps our investment management clients respond to business challenges and develop strategic solutions. By combining our extensive experience with detailed data from our annual research programs, we provide a unique viewpoint on:

• Drivers of success• Best-in-class firm characteristics• Metrics that gauge progress• Effective processes to grow business• Alignment of the organization with global

standards

By applying this knowledge to the businesses of individual managers, Greenwich Associates has the unparalleled ability to assist organizations as they address important questions related to structure, business development, compensation, product development, marketing, sales, distribution, and client service in the investment management industry.

Typical strategic advisory engagements include:

• Global expansion • Growth strategy • Client retention strategy • Business assessment • Product assessment • Product messaging and marketing • Acquisition strategy • Organization structure • Compensation structure • Succession planning • Distribution structure and staffing • New business strategy and communications

GREENWICH ASSOCIATES


Andrew McCollumAndrew is responsible for managing relationships with a number of leading asset managers, investment consultants and other service providers in the U.S.

and Canada. With more than 15 years of consulting to the asset management industry, Andrew has experience advising clients on a variety of distribution, marketing and product issues. He has recently led advisory engagements on global growth assessments, entering the institutional market, brand equity analyses, product positioning and messaging, thought leadership program design and execution, and private equity fund raising. He has also authored studies on opportunities and threats in the outsourced CIO market, trends in the ETF marketplace and developments in the defined contribution market. In addition, Andrew oversees the Firm’s work with institutional investors in North America and the subscription-based information service, Greenwich ACCESS for Asset Managers.

Before joining Greenwich Associates in 2009, Andrew was a managing director at Chatham Partners where he was responsible for managing the company’s research and consulting relationships with asset managers and defined contribution recordkeepers. Prior to that, he worked in the Financial Services and Corporate Strategy Practices at CEB (Corporate Executive Board) advising firms on strategy development, strategic planning, M&A, and competitive intelligence, among other topics. Andrew received his BA in Political Science from Cornell University and his MBA from the Kellogg School at Northwestern University.

Abhi ShroffAbhi leads the Firm’s Asian-ex Japan business and manages relationships with investment management clients. He advises the leading asset managers in

the region on a variety of topics including distribution, marketing and product development. Abhi also frequently leads advisory engagements to help asset manager develop their market entry strategy for Asia. Given the importance of SWFs and other government agencies in the region, Abhi regularly meets with these institutional clients to understand their investment needs and to provide advice on portfolio topics. He is a frequent speaker at industry and investor conferences.

Prior to joining Greenwich Associates in 2007, Abhi worked with UBS Investment Bank in London. He began his career as a consultant with PricewaterhouseCoopers Consulting, delivering client solutions in the Australian and Asian retail banking and asset management sectors. Abhi received his MBA (graduating with distinction) from the London Business School and his Bachelor of Business from Monash University in Australia.

Rodger SmithRodger leads the Strategic Advisory team that assists investment managers in responding to business challenges and develop strategic and change-

oriented solutions. As a consultant at Greenwich Associates, Rodger launched the Firm’s international business, has worked with investment managers around the world for more than 30 years, and has


deep experience advising on overall strategy, franchise building initiatives in local markets and globally, product positioning and articulation, and strategies to strengthen client and consultant relationships. Rodger has authored numerous articles and is a frequent speaker on the investment management industry globally.

Before joining Greenwich Associates in 1976, Rodger was vice president of investment for Allis-Chalmers, where he managed the firm’s pension fund, managed equity assets internally, and supervised a group of external investment management firms and custody banks. He is chairman of the Trust Advisory Committee of Tau Beta Pi and chair of the Dean’s Advisory Board at the Wisconsin School of Business. Rodger received both his B.S. in chemical engineering (with high honors) and his MBA (with distinction) from the University of Wisconsin.

Lydia VitalisLydia is responsible for managing relationships with a number of leading asset managers and investment consultants globally, with a focus on clients in the U.K.,

Germany and across Continental Europe. In addition to providing consulting around Greenwich Associates regular benchmarking services, Lydia has led recent advisory engagements on business development, market entry and product messaging. She also oversees the Firm’s work with institutional investors across Europe.

Lydia has more than 20 years of experience in asset management. Before joining

Greenwich Associates in 2011, she was the deputy head of European product develop-ment at J.P. Morgan Asset Management, focusing on the development and implementa tion of investment funds for multichannel and cross-border distribution. Prior to this she worked in a variety of product development, strategy and marketing roles at BlackRock, Merrill Lynch Investment Managers, HSBC Asset Management, and Citibank. Lydia received her MA in Geography from Oxford University.

Bryan KozlowskiBryan is a member of the Firm's Strategic Advisory team that assists investment managers respond to business challenges and develop strategic and

change-oriented solutions. Bryan works with clients globally on a variety of engagements including market entry and distribution strategies, product strategy reviews, business assessments and brand and value proposition development.

Before re-joining Greenwich Associates in 2014, Bryan was a member of Broadline Capital, a global private equity firm, where he served as Chief Financial Officer and Chief Operating Officer for one of the firm's portfolio holdings. Prior to this, he was a senior consultant with Casey, Quirk & Associates where he worked with asset management, hedge fund and private equity executives on market entry, organizational design, investment platform and due diligence engagements. Bryan was also a senior member of Morgan Stanley's Competitive Strategies Group where he focused on the firm's Asset and Wealth Management businesses.

www.greenwich.com | 6 High Ridge Park Stamford CT 06905 USA | Ph +1 203.625.5038/+1 800.704.1027 | [email protected]

GREENWICHASSOCIATES

Bryan began his professional career with Greenwich Associates where he held a number of research and management positions. Bryan earned his Bachelor of Arts in Political Science from the College of the Holy Cross and his MBA from the Kellogg School of Management.

Davis WalmsleyDavis consults with investment managers in North America on a variety of distribution, marketing and product opportunities. Davis is currently working on

several engagements focused on evaluating client satisfaction, sales effectiveness and brand awareness.

Davis has extensive experience advising investment managers. Prior to joining Greenwich Associates, he worked as a director in Barclays Investment Banking FIG practice where he provided M&A and capital markets advice to asset management clients. He conducted a research study and authored a paper focused on how investment managers build and sustain franchise value. Previously, he helped found the Strategic Advisory Group within Lehman Brothers’ Prime Services group, which provided management consulting services to the firm’s hedge fund clients. Davis received his BS in Finance and Economics from Lehigh University and his MBA from the Harvard Business School.

Christopher DunnChristopher consults with a number of the Firm's largest North American investment management and investment consultant clients.

Prior to joining Greenwich Associates, Christopher spent time at Fidelity Worldwide Investment in its Global Institutions Group and worked for U.K. Trade & Investment, the U.K. government's international business development arm.

Christopher earned his Master of International Business from the Fletcher School at Tufts University and his BA in International Studies and French from Baylor University.

Sara SikesSara is responsible for developing relationships with leading investment consultants in the U.S. as well as with asset managers and other

industry participants around the globe. In addition to consulting with clients around syndicated annual studies, Sara is also responsible for coordinating and executing custom advisory engagements. These projects are designed to help clients solve unique and/or complex business issues, or to gain a deeper understanding of their clients' and prospects' preferences and perceptions. Recent engagements have focused on multi-boutique branding approaches, client reporting strategies, global trends in the ETF marketplace, defined contribution plan design components, PE investor preferences, and various other unique business challenges.

Before joining the Investment Management practice, Sara was a Research Associate within the Firm's Corporate Banking division. Sara received her BA in Economics (with honors) from Middlebury College. n

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