Evolution of Institutional Investment Sales

Evolution of Institutional Investments

How have institutional sales changed?

Standard 60:40 asset allocations and benchmark investing used to be the blueprint recommended for all investors. Sales and communication processes were nearly formulaic. Managers simply let the prospects and consultants know which buckets or boxes they inhabited, how they fared compared to benchmarks and other managers in those buckets or boxes, and how they would be able to repeat their investment successes. Send your quarterly performance and fill out RFPs. The “Four P’s” dominated: Philosophy, People, Process and Performance. If the “product” managers didn’t prove to be “good” (outperforming benchmarks and peers), then they would be fired, and replaced by “better” product managers in those buckets and boxes. Today, many searches are conducted without an RFP even being distributed.

Risks led to change.

With the global financial crisis showing investors what true risks were – loss of capital, illiquidity, lack of true diversification, inability to fulfill liabilities and obligations, things changed. Almost overnight, institutional investors and fiduciaries started shedding traditional asset allocations and style-box methods to explore what was really needed to achieve successful investment outcomes.

Innovation led to choices.

Simultaneously, globalization, academics and technology expanded investment markets, and innovation shaped new instruments, new approaches and new ways to allocate. The inspired and creative vision of those with investment prowess brought better solutions to the institutional market. The old model of selling an investment firm’s history, AUM size, the “Four P’s” and products became less effective.

Choices led to challenge.

The challenge became how institutional clients in context of their dynamic, newly appreciated needs and goals then determined what array of solutions best made sense for their individual plans. This new practical world of understanding the real purposes of an asset pool, of managing the real risks of an investment program and of capitalizing on ever-expanding investment opportunities requires a thoughtful approach in identifying solutions.

Challenge led to consultative selling.

Thus, institutional sales professionals were led to evolve from “product sales” to “consultative sales.” The attributes of the consultative sales professional at the minimum are:

  • Expert investment knowledge. An MBA, CFA and/or minimum ten years in-depth investment industry experience are mandatory, as evidenced by the demand for former consultants and/or product specialists to serve as client service or sales professionals. Their knowledge must expand beyond a single style or asset class, and they must demonstrate a strong grasp of the risks and the numerous competing solutions facing institutional investors. The sales professional needs to be conversant on liquidity, risk budgets, leverage, hedging, different financial instruments and leading-edge solutions. They need to be well versed on quantitative, systematic and traditional investment approaches. Understanding attribution and correlations is key. Remember, time is limited, the volume of information overwhelming and insights valued.
  • Strong probing and listening skills. A client service or sales professional must be able to ask the right open-ended questions to elicit objectives, preferences, needs, objections, concerns, biases and opportunities. Walking in and delivering a product presentation at the first meeting will corner a firm in one category in a prospect’s mind. The ability to ask the right questions at the right time, and respond appropriately, demonstrates to the client or prospect the potential value of working together. Strong listening skills earn respect. They also are helpful in qualifying the prospect.
  • Empathy. A consultative sales professional must know what actions would be most worthwhile for the buyer and when. Premature product selling or asking for the wrong actions can regrettably mean no more meetings. Sales professionals and portfolio managers must leave their egos at the door.
  • Insightful, personalized and proactive follow-through. There should always be a follow-through action. It is not enough to send a rote thank you letter attached with performance information. It is not enough to send a social thank you note mentioning kids, hobbies or vacation spots. What challenges are absorbing the time or concerns of the prospect, client or consultant? What would help them to tackle those challenges? What intellectual capital do you have at your disposal to bring to bear for the prospect, consultant or client?
  • Representation of the client/prospect/consultant within the firm. In today’s highly competitive market, everyone needs to elevate their skills in communicating with clients, prospects and consultants. Consultative institutional sales professionals effectively convey and disseminate the priorities and concerns they learn in their interactions with the market within their firms. Investment professionals who are versed in the prospect’s needs and biases can have meaningful dialogues and bring highly focused, relevant solutions to that prospect, client or consultant.

Consultative Selling Can Lead to Success.

Institutional investors want and need to work with managers who are knowledgeable on capital markets worldwide, who understand risks and the importance of time, and who can offer solutions relevant to solving specific needs. Intellectual capital is as paramount as performance. Future success depends on asset managers elevating the role and expertise of all their institutional investment sales professionals. The benefits are multiple. First and foremost, clients are better served. Second, while a consultative approach can be demanding, the intellectual rewards are immense. The profession is elevated to a higher calling.


Charnley & Røstvold, Inc., a preeminent marketing consulting firm to asset management firms ranging in size from start-up firms to some of the world’s largest investment firms with over $1 trillion under management. Charnley & Røstvold helps clients with competitive positioning, marketing strategies, key messages, presentation refinements, communications and sales training, consultant relations and client service programs.

Jackie Charnley, co-founder of Charnley & Røstvold, Inc., is a popular industry speaker and author. Jackie serves on the ICMA-RC Board, a not-for-profit company serving the financial needs of over one million public employees. She was also a founding board member of PAICR (Professional Association for Investment Communications Resources).

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