Beware of Business Landmines

Beware of Business Landmines

Why some asset management firms fail to achieve growth objectives.

Successful, growing asset management firms share many common attributes. They understand the value of a brand and adhere to the promise of that brand, and avoid trying to be all things to all markets. They excel in strategic planning, and in assessing current and future needs of their target markets. They make certain to have sufficient resources, competitive offerings and strong product development to fulfill future needs. They know where to invest capital, reinvest, and when and where to refocus. They discern the differences between strategic and tactical marketing, and devote resources to both. Their portfolio managers are focused on priorities, but communicate well with clients, consultants and potential clients. The leading asset management firms are masters of communication, from their leaders and senior management to portfolio management, client services, sales and consultant relations. Distribution channels are provided what they need, tailored by channel.

But why do some seemingly strong asset management firms deteriorate, or worse, implode, to shadows of their former thriving selves? We have observed a few reasons recur often enough to be a pattern. This is meant to be a “what-to- watch-out- for” list. Or perhaps, more accurately, a “BE-SURE- TO-WATCH-OUT- FOR” list.

  1. Arrogance 

    A number of asset management firms enjoy having their stars in alignment with Mars and Venus (or Performance and Sales) in perfect harmony. Their performance records are stellar, their professional continuity shines bright, and asset growth is straight to the moon. Chins held high in the air, these managers know why they are so successful while others are stagnant. They are more brilliant than everyone else! Naturally, all investors and consultants recognize the brilliance. Distribution, sales and marketing are hardly necessary.Then performance stumbles. Or a lead investment team is plucked from the lofty stratosphere, lured away with promises of even more money and fame. Or consultants or clients become disenchanted with the disdain apparent in service and communications. Or competitors have learned how to exceed the star firm’s brand and service. Whatever the reason, a fissure begins. Arrogance and complacency blind management to any need for change. Client dissatisfaction and departures mount.

    Landmine! The firm is caught unaware.

  2. Focus on Profits 

    Another reason? Management focuses primarily on quarterly profits or on relative profit margins. They realize their margins are weak compared to others in the industry. Cuts must be made! What can be cut?Technology is too expensive. “Why do we need all these systems? Why do we need all these people? Why do we need training?” Technology can be cut.

    Client service is too expensive. “Why do we need to customize client service and communications? After all, what is good for one channel is good for another. It’s all the same investment product. It’s a commodity. Institutional investors do not need a higher level of client service.” Client service can be cut.

    Sales’ costs are too expensive. “Most of the growth comes over the transom through consultant channels. We don’t need to cover all markets, all territories and direct sales with all these expensive sales people. Why do they need training?” Sales can be cut.

    Marketing is too expensive. “Why do we need strategic marketing plans, product development, public relations, and all these fancy PowerPoints? Let’s systematize RFPs. We don’t need writers. We don’t need a head of marketing.” Marketing can be cut.

    Landmine! Suddenly, a growing firm becomes a dying firm.

  3. Lack of Preparation in Advance of Need 

    In some cases, a firm is growing steadily, investment people are in place, and consistent success is achieved. The decision is made to add to distribution. A few more institutional sales people, a new consultant relations team, a new channel. The first 18 months, demand increases slowly and intermittently. Management is impatient with the progress. And then the 24-month milestone is reached. Closing ratios are improving. Demand is increasing steadily. The firm adjusts. Management, lead portfolio managers, sales and client service professionals grow more adept in presentations and meetings with consultants. At the 36-month mark, the closing ratios are high, and demand is even higher. Lead portfolio managers, however, cannot be everywhere. Junior portfolio managers are sent to finals at the last minute, new sales and client service people are brought on and sent to meetings – all without training. People are flying here and there in response to high demand. No one has time to train, prepare, or even stop and think.Landmine! Closing ratios decline. Reputation weakens. Trust wanes. Demand stalls.

While as an asset management firm you cannot control the investment markets, you can control your destiny. In all three of the above examples, well-defined strategic plans would have helped to avoid each of the unfortunate outcomes.

“The essence of strategy is choosing what not to do.” ~ Michael E. Porter


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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