Walls Street is a brutal place to pitch an investment idea. To get in the door of the major investors they must like the asset class, the specific strategy, and the manager. This is a very high hurdle and I suspect that well under 10% of those seeking meetings with the desired investors can get one.

The reason I say this with confidence is that I was once that ‘gatekeeper.” My team sold billions of dollars of asset management products every year.  I was on the speed dial of every major business development guy at every major asset management firm. I was a prime “get” for a meeting and an anchor reason for a trip to New York or London if your firm wasn’t there. 

How the Conversation Starts

The conversation always starts with why an asset class is attractive. A potential investor can make a case to see you if the asset class is hot or cold, but you must convince them it will soon be red hot. Nobody is patient to wait for 2 year trends to play out in an environment of quarterly client reviews and redemptions. If what you’re selling doesn’t make money in the next six months, please come back when it will.

The stark reality is that people —I mean decision makers— are way too busy to take a cordial meeting that won’t produce results quickly.  

The investment world is highly efficient in distributing information, so most professionals share common beliefs. The good asset management pros always have a unique twist on the current situation that compels you to take the meeting. If you don’t, the obvious threat is you’ll miss the “next big thing,” and this leads to job loss for guys in my position.

The single best asset class to pitch: a new play on an exploding demographic opportunity.

This is where people get rich.

Why ‘Your’ Strategy?

Now we have determined to give 50 valuable minutes of a day to an asset manager because they have an out-of-consensus view on an asset class. The next question is, “What makes your approach so special? Why not play this differently from how you suggest?”

Most asset managers grew up from some core competency. Managers who started as a fixed income shop will always pitch the fixed income strategy, when the equity strategy may be a better fit or another good alternative. The job here is to figure out where the fulcrum is in the risk-return tradeoff if the strategy does pay out as scripted.  

The reality is also that wealth managers have many types of clients. Some are predisposed to only conservative fixed income, while others will employ wildly aggressive strategies if the reward compensates for the risk. Wealth managers who find a great new idea want to check every possible box and offer the broadest exposure they can to clients.

So, What’s Unique About You?

At this point, the elephant in the room is what’s so special about you?  The point here is that many strategies can easily be replicated by ETFs, trackers, or —worse yet— by other managers who are better than you.

Now the asset manager must demonstrate they have a unique (possibly proprietary) approach to capitalize on the strategy they are selling. Otherwise, I go back to my desk and execute the strategy in some other manner.  

All managers know this and they come loaded for bear with analytics on their track record, their risk discipline, their team structure, their approval process, and many more factors that demonstrate how they are unique. You know it’s serious when the business development guys take over from the fund managers now and stress the overall firm relationship.

Once the asset manager leaves, the internal processes start. Votes are taken by the relevant stakeholders on the merit of the opportunity from both an investment and business perspective.

Every firm will run a variety of due diligence traps to make sure the manager is doing what they claim and that the assets are held in good form in the name of the investors. Bernie Madoff has made operational due diligence as important as generating alpha. Return of capital is now as much a part of the dialogue as return on capital.

Regardless of the process, the tenets of the investment case are always:

  • Why this asset class now?
  • What strategies can be used to capture these returns?
  • What makes you different and someone we should do business with?

I think this framework translates well into the world of website investing and I want to help raise the level of sophisticated dialogue investors have about it.

I’d be remiss if I didn’t repeat my mantra: “You’re just a deal away.”

Ian Bond


Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.