Does Your Investment Story Need an Overhaul?

In the competitive world of asset management business development, performance may open the door, but a compelling and credible story closes the deal.

Some asset managers believe that performance is the story. But it’s not. It’s the attention-grabbing headline that your core investment narrative must always be proving, whether it’s on the pages of a commentary or your web site, spoken by a portfolio manager in a webinar or video, or summarized in a sales presentation.

In Sondhelm Partners’ recent research report, Weathering the Storm: How Asset Managers are Adjusting to the New Reality, 76% of boutique asset managers who responded to our survey said they believe that their story and positioning are resonating in the marketplace.

What’s interesting about this figure is that the majority of respondents who feel confident that their story is helping them win new business say that the main reason is because their signature strategy or fund is filling a particular niche that is currently in high demand among investors, whether it’s impact and ESG investing, deep value or short duration credit.

But what happens when a particular strategy is out of favor, due to market headwinds or changing preferences among institutions and advisors? In these situations, when performance isn’t a door-opener, asset managers shouldn’t change their core story. Instead, they need to be honest and explain why their strategies aren’t working right now. And, more importantly, provide reasons why investors should either stick with the shares they own or consider entering in right now to capture future upside potential.

The Key Elements of Effective Storytelling

Until recently, many top-notch wholesalers were able to win over skeptical prospects through a combination of charm and salesmanship even when the story they were telling was less than compelling.

Those days are over. In this post-COVID era of remote working and Zoom meetings, the role of the wholesaler has been diminished. Consultants and advisors are zeroing in on the quality, relevancy and credibility of the message, rather than the messenger. In this virtual world, “selling” performance no longer works. Clients and prospects want to be convinced that alpha is the result of skill, rather than luck. That’s where the value of a credible, compelling story comes in.

There are many ways to tell an investment story, but the most effective narratives incorporate three essential elements.

1. Differentiation

Unless your strategy owns its own niche, you’re probably competing with other similar products, some of which may be more well known. In this market, it’s critical to explain why, say, your large cap value strategy stands out in a crowded field. What gives your fundamental or quantitative research methods an edge in identifying opportunities before the market catches on? Why is your approach to security selection and portfolio construction primed to deliver alpha? How are your portfolio managers and analysts uniquely qualified to deliver excess returns at reasonable costs?

2. Transparency

In these skeptical times you can’t afford to treat your investment process like a secret recipe. You need to explain, in granular detail if necessary, exactly why your strategy is working right now, even if this means discussing how your portfolio managers have this process to execute trades that have delivered winning results.

3. Candor

Your strategies won’t beat their benchmarks all the time. And sometimes they’ll trail them badly. Instead of trying to downplay underperformance as a consequence of unanticipated events (like the COVID-19 crisis), be upfront explaining why it’s happening.

Is it tied to weakness in the asset class or sectors the fund primarily invests in? Is it the result of one or more trades that didn’t work out? Do you plan on doing anything differently to turn it around or are you committed to standing your ground in the belief that your approach will deliver strong results over the long term?

Creating a memorable and convincing story

If your investment story isn’t the best it can be right now, take the time to refresh it.

Dig deep

Interview various stakeholders in the firm, from your CIO and portfolio managers to your wholesalers and back-office personnel team, to truly identify the unique qualities that shape the core of your investment story. You may discover that some people don’t really know what your core story is or have strong and possibly misguided opinions on what it should be. Getting this information on paper is the first step toward weeding out the elements that don’t matter and emphasizing those that do.

Find out what’s driving interest or skepticism among your target audiences

It’s important to understand how your revamped story may play among institutional consultants and advisors. Before you go to market, spend some time reviewing articles about the investment strategies you’re focusing on in online publications like Pensions & Investments and Institutional Investor or Financial Planning and Investment News. They may give you a good sense of whether your products are in or out of favor at the moment, and any hurdles you may need to overcome to tell your story effectively.

Compare stories with your competitors

You may think your revamped story is unique, but how can you be sure? By reviewing your chief competitors’ sales literature, pitchbooks, commentaries, whitepapers and website content to understand the stories they’re delivering to the marketplace. They may give you ideas for improving your own story, or at least prevent you from telling a similar story your clients and prospects have already heard.

Use a variety of means to tell your story

If you want your upgraded story to gain traction among your target audiences, you need to communicate it using a variety of sales and marketing vehicles. It needs to be prominently featured in marketing brochures, web site content and pitchbooks. Your investment team needs to demonstrate real-life applications of your story in commentaries, whitepapers, videos and news media appearances. Your salespeople need to be trained not only to tell the story, but how to position it for different audiences and answer questions to win over skeptical consultants and advisors.

Get feedback from people you trust

Consider sharing the latest iteration of your story with a few of your most loyal clients to get their candid feedback and constructive criticism. You may find out that your story isn’t quite ready for prime time.

Use a qualified storyteller

While your firm probably employs excellent storytellers, you may not have the in-house talent to create, publish and promote the actual stories through a variety of print and online media.

Rather than try to do this yourself, consider hiring an experienced writer or marketing firm to work with your team. Chances are, they’ve helped develop and distribute stories and created opportunities for the firm‘s subject matter experts to tell them on various media platforms. So they can leverage their experience and best practices to make sure your story truly stands out.

Get our research report

Want to learn how other boutique firms are adjusting to this post-COVID reality? Download our complimentary report, which is sponsored by Discovery DataSalesPage and Cohen & Co.

Related: How to Make Sure Your Voice Doesn’t Get Lost in the Mix