Asset management has plenty of choice to offer investors, in terms of procedure, products, partners and processes. But alongside these factors, the investor must also examine the areas of product communication and distribution.
Sales, the ‘investor equation’ and ‘an eagle eye’
The product package is one thing. Other topics can include sales skills and the know-how of institutional investors.
Forum discussions with domestic and international family offices point to the view that criticism should not only be directed at the sales people.
Of course there are ‘Verbal Fact Sheets’ – unsatisfactory explanations often made by salespeople over the telephone – and a noticeable number of practitioners with insufficient knowledge of the product details and technical know-how. It is naturally no great pleasure for investors to deal with such situations.
One can see uncertainty in one or another investor in making a decent judgment about some SRI projects – and especially in the environment of SRI projects, because of important technical aspects, and sustaining the financial cost.
Seed-money is often overlooked, and seldom even emphasised.
And one can barely find any information via specialized books, nor even through direct discussions with investors, about how many financially designed SRI projects fail at the preliminary stage.
A lack of monitoring the product, faulty materials, and there being no specific communication to the target group of seed investors can all lead to a product going wrong.
What to expect
Just as it is for open-end funds, so too for closed-end funds – the optimization and redesign of processes in product management and the sales of fund structures are reinforced by the fund provider.
Many closed-end fund initiators are currently examining or reviewing their business plan, especially in the fields of alternative energy and infrastructure. Regulatory issues like the implemention of AIFM rules could play an important role in redefining business models in the fields of the closed-end fund industry and classical asset management industry.
Many players could think of building partnerships with large platforms, instead of dealing with regulation alone.
‘Poorly’ designed or ‘badly’ calculated products receive no great response from institutional investors.
If new sales methods and education are delivered for these products, they will certainly meet the level of institutional investors. This would enhance and boost the industry for successful competitors with institutional qualities.
Many closed-end fund providers are currently examining or reviewing their business plan, especially in the fields of alternative energy and infrastructure.
Regulatory issues like the implemention of AIFM directive could play an important role in redefining the business models for the closed-end fund industry and for the classical asset management industry, as well.
Markus Hill is an independent asset management consultant in Frankfurt. For further details and contact, visit www.markus-hill.com.