Author: Mike McLaughlin

Pitch Books: 3 Dos, 3 Don’ts, and 1 Maybe

Posted by Mike McLaughlin on Aug 08, 2016, in Thoughts , tagged with ,

Few things cause more angst among institutional marketing teams than pitch books. At many of our clients there’s an ongoing, fluid dialogue focused on key execution issues:

  • What information is most critical?
  • What’s the right level of detail?
  • How should we structure the story?
  • Should we present multiple, related capabilities?
  • How much modification and customization should we allow on a case-by-case basis?

Several recent projects immersed us in a pitch book wonderland. So with that in mind I thought to share a few quick takeaways on what works and what doesn’t.

3 Things to Do

  • Include Case Studies: Roughly half of the pitch books we’ve analyzed contain a case study. When done well, these bring the investment process – which is among the least-differentiated content in a typical deck – to life by showcasing both the team and the specific way in which they operate.
  • Provide Context: A rare component across pitch books is broader macroeconomic or market context surrounding a strategy, which I see as a miss. Though it may not always be needed, including the bigger picture around a capability establishes its relevance, generates more buy-in for discussing its specifics, and communicates the firm’s overall expertise.
  • Reference Peer Data: A second infrequent element within the prototypical pitch book is peer data. As with macro / market context, incorporating how the strategy has performed and how key characteristics and risk measures match up with competitive offerings is an invaluable way to thoroughly educate a prospect.

3 Things to Avoid

  • A Process Funnel: As I referenced above, I think the investment process is often among the least compelling facets of the average pitch book. Nothing hammers that home more than the generic three or four-step funnel. Any presentation besides that is an upgrade.

Inv Process

  • Mammoth Team Slides: Do you have 85 fixed income PMs and analysts spread across 12 global offices? Fantastic. But nobody wants to see the entire org chart with names, titles, certifications, and other details. An overview of your organization is fine, but when it comes to team specifics focus on the core people that make the strategy go.
  • Opportunistic Performance Presentation: Occasionally firms will insert an outlier performance chart; something like rolling 3-month performance over a non-standard time period. I think this can hurt more than it helps, as unexpected presentations bring out skepticism (i.e., “why are you showing me this?”).

1 Thing I’m Unsure About: Reference Retail Success?

Some firms cite retail-oriented elements of a given strategy within a pitch book: AUM in the corresponding mutual fund, Morningstar ratings and other awards received by the fund, etc.

Most institutional marketers blanch at this retail infiltration, but I’m not so sure it’s a bad thing. I understand the concern of looking like a retail firm, but I also think it gives relevant and concise support to the overall message. Noting that the mutual fund has a 5-star rating, for example, will be quickly digested as a positive signal on the strategy overall by the average institutional investor.

I don’t feel strongly enough to say this is a definite “Do”, but I am confident that it’s not a definite “Don’t”.

The Top 3 Videos of 2016 (So Far)

Posted by Mike McLaughlin on Aug 08, 2016, in Thoughts , tagged with , , , , ,

Over the past few weeks I’ve spent A LOT of time looking at asset managers’ video content. I learned many things, but the most fun question to consider is a simple one: which videos are the best?

Below is a wholly subjective Top 3 list based on content posted to the YouTube catalogs of 25 firms since the start of 2016. Before we get there, a few quick thoughts:

  • There is a high-degree of sameness. Lots of talking heads covering lots of the same issues in similar formats. In fairness it’s not all that easy to be truly original with video in this industry.
  • Scripts are limiting. Having non-actors who are required to stick to a tight script is often a detriment in terms of being able to connect with presenters. Looser presentations have a little more snap to them.
  • Nothing is viral. It seems 98% of the video have view counts in the three figures (or less).
  • Production values are universally strong. Firms have mastered incorporating different angles, music, graphics, quick edits, and more.

That said, let’s get to the top 3…

3. Janus: Denver Pride Fest

So many firms have videos that TELL you about their culture. Voiceovers, brief looks at people in the office in various settings, you know the drill. This clip succeeds where those fall short – it SHOWS genuine aspects of the Janus culture. The video is only viewable on YouTube so click here or the image below to watch.

Janus

2. PIMCO: Asset Allocation for Equities in 2016

Over 25 seconds PIMCO uses one question, two statements, and two simple graphics to deliver its fundamental guidance on how the equity markets will go over the course of the year. No long-winded speeches, no multi-page paper… just a direct and clear message.

1. Schroders: Hidden Talent – Muy Thai

I am not sure how many topics would be more unexpected than Muy Thai in a video from an asset manager.

which way?

Two Ads, Portfolio Construction, and a Strategic Dilemma for Asset Managers

Posted by Mike McLaughlin on Jul 11, 2016, in Thoughts , tagged with , , , ,

A few years ago we worked with a large asset management firm to conduct a strategic review of the robo-advisor market. At the time our client simply wanted to learn more about the space and consider the implications, both good and bad, of these potentially-ascendant companies.

One topic we addressed during the work was portfolio construction. Specifically, the fact that for the most part asset managers held a mostly undefined role in it for advisors and investors.

While we’ve had this conversation many times since, it popped directly into my mind upon encountering two new “Uncommon Presentation” ads from Invesco. Each triggered very different reactions for me. First up, “It’s time to bench the benchmarks”:

This ad relays exactly the type of message I’d expect to see from Invesco or any firm with significant actively-managed offerings. It relays the need to build portfolios with more than just straightforward index (or low active share) strategies. The implication is for investors who buy into that concept to look at Invesco as someone who can offer solutions to plug into their portfolios. Makes perfect sense.

Next up, “Goodbye 60/40. Hello 50/30/20.”:

This ad leaves me less clear. The message is direct – investors need to shift from a traditional portfolio allocation to one that utilizes more alts – but the role Invesco can and will play is not. If the ad established Invesco as a leading alternatives provider, a firm that can help investors with the 20% allocation, that would fit. However, the ad is framed with and ultimately focused on overall portfolio construction (the 50/30/20).

This ties back to the issue we raised in the robo project: what role, exactly, does an intermediary-focused (i.e., non-direct) asset manager play in helping advisors and investors construct portfolios? At this moment, for the most part, I’d argue the answer is “not much”.

Of course maybe the ad is simply the jumping-off point for more discussion, which is fine. But I do think it illustrates two critical questions for most traditional, active, retail-centric asset managers to address:

  1. Is it feasible for us to be viewed as a key resource in portfolio construction or are we too far down the road of ceding that ground to our distributors, direct firms, and new entrants like robo-advisors?
  2. If it is feasible, what is our strategy?

The rash of robo-advisor acquisitions supports that idea that asset managers believe that becoming a more prominent resource for portfolio construction is feasible and necessary. But the messaging around these acquisitions has been carefully curated to be non-threatening to the status quo (i.e., “we’re doing this to help, not challenge, advisors”). And I don’t know that 20 different asset managers offering 20 nuanced robo platforms is an outcome, even in the short-term, that any single firm should view as favorable.

So when it comes to portfolio construction and the role asset managers wish to and can play in it, “what is our strategy?” is a more pressing question than ever.

The Robots are Definitely Coming, But Slowly

Posted by Mike McLaughlin on Jun 06, 2016, in Thoughts , tagged with ,

A few months back a friend of mine sent me a link to The Robots are Coming for Wall Street, which focuses on how automation is taking over more and more tasks once handled by humans in the financial services industry. The story’s lead anecdote relays how software from Kensho is able to digest, analyze, and publish a report on the latest US employment report within minutes. Amazing.

Of course most everyone agrees on the trend and opportunity of automation. But in discussions with my friend it became clear that the two of us have different views on the pace of change. While he sees an aggressive dismantling of how many things are done today, I believe the landscape will shift more slowly, especially through the lens of the asset management industry.

As an example, in two recent client conversations the natural language software from Narrative Science has come up. One firm just deployed their software to write first drafts of investment commentary; another came close but postponed implementation.

But what’s been more interesting to me is the frequency with which industry marketers have never heard of the company. Though the company has been written up in the Wall Street Journal and Investment News as far back as 2013, there is seemingly no widespread buzz about them specifically or these types of capabilities in general. To illustrate, Ignites has mentioned Narrative Science just a single time in a January 2015 story (subscription).

Granted I am putting this through an anecdotal lens. Even so, I think more frequently than not transformational change takes a long time. Whether the topic is Big Data, sales comp, or automation, it will be years before the word “potential” is scrubbed from the conversation.

[ image credit: Sean Davis ]

Targeting (the Parents of) Millennials

Posted by Mike McLaughlin on May 18, 2016, in Thoughts , tagged with ,

I’ve argued in the past that the asset management industry is overrating the importance of Millennials. While Millennials rank among the most consistent topics of discussion in our work, a senior distribution executive at a client of ours recently framed the issue of engaging them as concisely and, even better, humorously, as anyone I’ve heard.

In talking about the potential value of addressing Millennials, he said:

You know who firms like us need to focus on? Me! I’m 51 and it’s me and my generation who are going to be inheriting wealth. I haven’t inherited anything yet. Forget about my 20-something kids, I’m the target!

We can cite research that the bulk of the wealth transfer to Millennials is more than 15 years away from starting, or that the transfer will be highly concentrated among just a small percentage of that generation.

But sometimes a good anecdotal zinger is all you need to have an interesting conversation.

[ image credit: Optician Training ]