What the hell has that headline got to do with Fund Management, you may well ask? Well recently I met up with a US equity manager, a legend in the space and a bit of a blast from the past, James Abate. Some of you may remember him working with the equally legendary Ian Chimes at Credit Suisse and later at Psigma. We bumped into each other at a conference where I had been boring people with my take on 3rd party ManCos and we got chatting about the asset management business in general. True to form he came up with a classic line….”Fund Management is like Steak. In recent years we have trimmed off all the fat to make it healthier only to discover that fat can actually be good for you”. By all accounts he is famous for his one liners!
James’s reference was a reflection on the changes in the asset management world over the years and whether we have gone too far. There has been a lot of paring back in many areas and in many cases this has been necessary but was based on the lack of investment in technology, poor training and in many cases pressure from clients, regulators and ultimately peer pressure to improve the price efficiency of the funds and products we produce. Great!
However there has been one area that I think we may have over exercised our cost reductions and our efficiency to the detriment of the industry as a whole. That of client relationships. Back in the 80’s and 90’s there was a tremendous amount of client relationship that went beyond the pail and was seen as a jolly for many. Trips to Asia, the USA and golf invites to some of the best courses were in plentiful supply. Today these have all but disappeared and in fact I was wondering at the weekend how Twickenham and Wembley will be able to offer the amazing corporate hospitality that they have done in the past. Gone are the days when Fund Managers would take clients to the rugby with lavish meals and drinks flowing all afternoon. So if the Bribery & Corruption Act has affected the Financial Services industry why has it not affected other industries in the same way or are firms just entertaining staff!? If our industry is not supporting the big events, who is filling the void or has something passed me by. NFI…..again…
Anyway, back to my point. Relationship is everything in all our lives. It’s what makes us human. It creates trust, respect and ultimately a belief in the other person. In short we want to have a relationship with people we like. Now, I know there are people out there who don’t believe in that and that’s fine; bah humbug! And I know that in our industry the numbers are what matters or aspects linked to the numbers. Emotions should not factor in any decision making and I am certainly not suggesting that people are influenced by sales people or that a “personality” will get them influenced by that “star factor”. People are just not that niaive anymore. CFA charter-holders can dissect the numbers, analyse the figures and read the documentation so as to make their own minds up.
Sales people however have a pivotal role to play in all of this and I know some will still disagree but there are those who believe that, due to who they are, the size of the assets they manage, the firm they work for or possibly past relationships, they can get that meeting or make that call to a star Manager. Well sorry to disappoint you but access to Managers is getting harder and harder. They are pulled in so many ways that marketing is the last place they can find time for. Utilisation of Managers time is becoming more and more difficult and so we use audio, video and conference facilities to put them in front of people. Face to face is increasingly difficult and whilst it may still happen in some cases, it will decline. So we are reduced to a Fintech solution that moves the relationship from an emotional connection to a technological connection via the internet and media connections. Sad……
On the sales side we all know those clients who treat sales people with contempt and at times are just plain rude. Well it goes with the territory I’m afraid. Wealth Managers get rude clients and clients get rude service elsewhere. It’s sadly just a reflection on society but I am not here to change society or to comment on how people should treat each other but to advocate for a situation that asset managers do not cut too far. If they do then whilst they may save money in the short term, they will lose that connection with investors, wealth managers and analysts. But equally those people should look at the sales people as a resource that can help in the research and gathering knowledge on new ideas, strategy development or changes and help get to know a business beyond the numbers. At the end of the day we can all work together to get the best out of the situation but not if one side of the relationship is no longer there.
Have a great weekend and let’s build those relationships. Go hug a sales person!! Be sure to ask permission though……..