In communications with clients, consultants, intermediaries and prospects, responding effectively to questions is equally as important as telling your story well. We have seen brilliant presenters lose a sale due to ineptness or impatience in responding to questions. Answering questions with Authenticity, Brevity and Clarity (ABCs) is the key to achieving best practices.
It takes as much work to master the ABCs and become as proficient at answering questions as it does to become a successful presenter. Following are suggestions to enhance your team’s effectiveness, consistency and confidence in addressing tough questions and objections.
Anticipate Likely Questions
Consider every question important. Document likely and all tough questions raised by clients, consultants and prospects. The tough questions will vary by type and life cycle of an asset management firm. For example, for an emerging manager, common tough questions include:
- How is your firm capitalized?
- What is your break even?
- How long is your business sustainable with your current capitalization if your AUM growth is slower than expected?
- What is your long-term vision for the firm?
- Describe your operations, back-office, compliance/legal, trading and IT resources.
- How can you cover the entire global equity universe with such a small team?
Questions often asked of more established firms include:
- Describe the ownership structure.
- How many employees have equity in the firm?
- How do you attract and retain talent? Explain your turnover.
- What is the compensation structure for your investment professionals?
- What are your succession plans?
- Describe the diversity within your firm.
- Why did you underperform in 2008/2009?
Develop Concise, Direct, Positive Responses
Over-answers are the kiss of death. Draft three- to four-bullet answers to the tough questions. Use the “power of three” to frame your answers (e.g., There are three reasons we sell a security). Weave your key messages and benefits into your answers where appropriate. Designate an internal point person to whom people can send new tough questions that arise. Work as a team to craft direct, positive, concise answers. Distribute the list of tough questions and answers to all external-facing professionals, as well as team members who work on RFPs and written communications. Your firm’s written and verbal communications will benefit from greater clarity and consistency.
The best communicators rehearse both their presentations, and questions and answers. Prior to presentations and meetings, agree who will respond to which types of questions – e.g., organizational, team continuity and turnover, portfolio-specific, performance-related. Be concise. Limit your responses to three sentences, whenever possible.
Invite questions at the beginning and during your presentation, as well as before you close. Avoid prefacing your responses with the phrase, “That’s a good question.” You risk offending others when you do not say it, and when over-used, it becomes evident that it is a filler phrase. Also, avoid saying, “sure” every time you are asked a question. When needed, pause for two to three seconds to form your response before beginning to answer. If a question is unclear, probe and request clarification (e.g., are you asking about portfolio turnover or professional continuity?). Avoid over-answers. Allow people to ask for more details if interested. Also avoid being overly abrupt, however, and answering as if you are in a deposition. Be flexible. Answer questions when asked rather than tell people you will get to their question later. If you do not know the answer to a question, don’t wing it. Offer to follow up with the answer and do so within 24 hours.
Above all, be honest. Admit your mistakes without being overly apologetic. If a client asks you about underperformance, empathize, educate and elevate. Always be positive and convey conviction. Never be defensive, evasive or dismissive.
Questions are a golden opportunity to engage clients, consultants, intermediaries and prospects in meaningful dialogues. The more effective you are in answering questions, the more questions people will ask you. The more questions people ask you, the greater the opportunity for you to understand their interests and concerns, and to develop trusting relationships.
“Honesty is the first chapter of the book of wisdom.”
~ Thomas Jefferson
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.
Christine Røstvold, co-founder of Charnley & Røstvold, Inc., is a popular industry speaker and author. Christine was a founding board member of PAICR (Professional Association for Investment Communications Resources), and served on the Advisory Board for more than a decade.