MFMM

The mistake: Mismatching their product design and their target investors.

Summary:

Okay, let’s do one more. Think of it as a bonus mistake, #6 of 5: Mismatching your product design and your target investors. #6 is kind of related to the mistakes that came before it, especially to #5 (not qualifying your prospects). And, come to think of it, #2 (rushing your investor).

Say, for example, you come up with a synthetic way to reproduce a certain allocation. It’s cheaper to reproduce, but you still get the directionality.

For you, it’s exciting and intellectually stimulating. But as for your customers, maybe they haven’t even thought about it, and even if they have, it’s too complex for them to get comfortable with.

Qualifying will be especially important here. And don’t forget that the people you designed it for might not even be the right candidates. And when you do find the right candidates, don’t forget mistake #2 (rushing your investors) — you might have come up with the idea in a rush of inspiration at the airport, but your investors will probably need more time to get their heads around the idea.

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The full audio:

About Baldwin Berges

Baldwin has been active in the investment industry for more than 20 years. His specialty is all about positioning investment opportunities so they are easy to understand and developing strategies and systems to convert more opportunities into business during long sales cycles.

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About Matt Krause

Matt began his professional life managing inventory levels for wholesale import companies and forecasting labor costs for national retail chains. Since 2006, he has been teaching professionals how to present themselves and their companies better. His clients work for companies like Citibank, Allianz, 3M, P&G, and Deloitte.

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Transcript of the audio:

Matt:

How about point number six? Do you want to move on to point number six?

Baldwin:

Yeah.

Matt:

Okay, so what’s on your mind?

Baldwin:

Product design. Product design is very important, but it’s also a very complicated subject. It kind of cuts two ways. You can be either too innovative or too lagging. Let me unpack this a little bit. Let’s start with being too innovative. We can come up with investment strategies that come as a result of our expertise. It may be an awesome idea. They usually are. They’re very interesting constructs, complex strategies, especially in the hedge fund space or if you’re doing structured products, but the market is absolutely not ready for it.

For example, this has to do when you come up with a synthetic way to reproduce a certain allocation, which makes it cheaper to reproduce but you still get the – not to sound too technical – directionality of what you want to do.

Often what it is is that in your mind, as a manager, it may be the optimal construction, but then it becomes very difficult to go and position it to people. First of all, they haven’t even thought about the possibility of it.

Secondly, it’s way too complex for them to get comfortable enough to understand. It’s going to take you way too long to make them comfortable. By the time they’re comfortable, the opportunity has passed. This happens in structured products, and this happens in the realm of let’s say more complex finance engineering.

In fact, we once made that mistake. I remember we went down to southern Spain. We saw a big savings bank, and we had this idea that we cooked up in Frankfurt on how to get a good return from the markets while protecting the downside. It was very, very exotic construction at the time. Now it’s quite commonplace. The savings bank said, “That sounds awesome. All right.” We went back to the workshop, to the lab, and we made the product and said, “Guess what? It’s ready. Let’s go.” And that guy wasn’t willing to stick his neck out. That guy wouldn’t even know how to even start talking about it with his investment committee. We were too early. The thing is, six months later it turned out to be the best selling product for a year, but they never invested in it. That’s just to show an anecdote. The person we made it for never invested. How crazy is that?

Anyway, that’s on one spectrum. That’s too difficult. It’s appealing as an investment manager, from an intellectual … It’s motivating. It’s nice. On the other extreme – this is where a lot of managers fall into the temptation – is that everybody’s been buying for example let’s say Bitcoin or everybody’s been buying S&P 500. S&P 500 is up by I don’t know how much. You know how the media thing goes. “It’s never going to end.” They realize that everybody around them has been in. This is what the bubbles are made of. Everything becomes so obvious, and then the manager says, “This is what the people want.” People walk up to their bank man and say, “Hey, do you have that kind of strategy?” I think it was Rockefeller who said when a shoe-shiner asked him about the stock market is when he cashed out. I think that’s what happened. A lot of managers are very attracted to short-term flows because they can build up a portfolio very quickly and get all the fees.

The problem with that, usually, is that six months down the road it all starts unraveling. Investors lose money. They’re unhappy. They’re never coming back. Product design is important. I think before that was difficult, in the days that I was really involved in fund management. It was kind of more difficult because you’d almost have to, in a way, go door to door. Today, with all the data out there and today if you’re willing to upgrade your marketing department and equip it with a little bit more sophisticated online tools for searching what the appetite is, that’s probably the better way to construct the product. You can sort of anticipate. I guess another way to say it is, instead of going in and launching the product or creating the product, what you probably want to do is you want to start floating the idea in the form of content and then see what the interaction is. By the time that opportunity is starting to shape up, then you probably have a willing investor base who’s right on time.

I’ll give you an example of this. Recently, the emerging markets – this is two or three years ago – have sold off massively. A lot of managers were out there basically explaining what was going on in the markets. They weren’t trying to motivate people to buy the emerging markets, but they were trying to make them understand a little bit better that, “Look, this is on the way down, but it’s going to bottom out. It’s not going to go below an intrinsic value. It’s going to go below that, but not much. It’s going to bottom out. It’s going to bottom out.” They kept on, and there’s a handful of managers that really capitalized on that. Since they weren’t really aggressively promoting emerging markets but they were informing people about what was going on, guess what happened the moment they said, “We think it’s time?”

Matt:

What happened?

Baldwin:

Well, they captured a lot of the inflows because there’s been a recent emerging market rally. I’m not going to name names on the podcast. I don’t think that’s right to do, but there are a few, and a couple of big managers who actually did this one right. They captured a lot of inflows just because they were keeping people posted on what’s going on in this space, keeping them educated and preparing them to get comfortable by the time it was going to turn around.

It’s difficult to give concrete advice around this point, but, again, I think it’s when you shift your marketing towards selling more towards education. When you get someone’s trust and you become their mentor in a way, and if you’re feeling comfortable with making a recommendation at a certain point, those people who you have been educating and you say “now is the moment,” your response is probably going to be good. You’re going to have successful fund launches. It’s simplistically explained. I don’t really know much about it, but I have a few friends in the fashion industry. That’s exactly how they work. They have to think about what’s going to be in three seasons down the road, and there’s people who have really figured out how to spot that. There’s a whole industry that does that for them. They make a lot of money doing that, by the way.

Matt:

Oh yeah.

Baldwin:

It’s very important.

Matt:

There’s a lot of money in forecasting the future.

Baldwin:

Yeah. I think if you can get into that, in the investment management industry, or start thinking like that as a fund manager, there may be a pot of gold at the end of that rainbow.

Matt:

Yeah. Was there anything else that you wanted to dig into, or shall we finish up the recording here?

Baldwin:

There’s probably a lot more, but let’s save that for another time.

Matt:

Yeah, let’s save that for another time. End of formal recording.

About Matt Krause

Matt began his professional life as an import buyer, and since 2006 has been teaching companies how to connect with their investors and clients better. His clients work in Istanbul, London, and Madrid for companies like Allianz, 3M, P&G, Citibank, and Reckitt Benckiser. He also walked across Turkey and wrote a book about it.

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The mistake: Not qualifying their prospects.

Summary:

At first glance this one seems like a rookie mistake, but even people who have been in the business a long time still do it sometimes: wasting time talking to the wrong people.

It’s not that the “wrong people” are bad people. But your time is valuable, and it shouldn’t be spent helping fund buyers hit their KPIs, or helping junior staffers learn how to interview fund managers.

A pro tip: Hold more of the initial meetings on Skype. The fund management business is notoriously shy when it comes to technology, but we talk to plenty of fund buyers, and they are more and more accepting of web meetings. In fact, they say web meetings are a very effective way for them to qualify or disqualify fund managers. They might be even more glad than you are that you suggested a Skype meeting first.

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The full audio:

About Baldwin Berges

Baldwin has been active in the investment industry for more than 20 years. His specialty is all about positioning investment opportunities so they are easy to understand and developing strategies and systems to convert more opportunities into business during long sales cycles.

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About Matt Krause

Matt began his professional life managing inventory levels for wholesale import companies and forecasting labor costs for national retail chains. Since 2006, he has been teaching professionals how to present themselves and their companies better. His clients work for companies like Citibank, Allianz, 3M, P&G, and Deloitte.

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Transcript of the audio:

Matt:

Give me point number five. What’s on your mind for that one?

Baldwin:

Matt, we spoke about this a little while ago. It’s about the qualifying of your prospects. It’s very important that we do that. I used to do this. I’m as guilty of it as anybody else. I used to make this map of “it seems like,” for example, “we haven’t been to Milan in a while. We have to go back to Milan.” Then what you do is you pull a list, and then you basically either email them or call them and say, “Hey, we’re going to be in Milan that day. Would you like to meet with us?” A lot of people say, “Yeah, sure. That sounds great. It’s been a while, good to catch up. Yeah, sure.” You took it as, “Yeah, sure, we have to see them because they’re interested in seeing us. They may actually eventually become clients because of their relationship.” It’s all hunky-dory. You go to Milan, and you do all these meetings. At the airport, on your way back, it’s like, “Okay, so maybe there’s half an opportunity here, after like ten meetings.”

I think one of the things that you have to understand is that this is not a very good approach, to just go and see whoever you can. The reality is that – if you’re a fund manager and the people you’re meeting with, fund buyers and/or private bankers and/or all the professionals whose job it is to meet fund managers – you are helping them achieve their KPIs. Which means that a fund selector gets measured on the amount of meetings he has with fund managers. Even though they have no intention of investing, you may just be helping them get those numbers up.

That’s one thing – big mistake. People are polite. They may pretend that they’re really interested.

The second one is where they just use you to gather information about an investment that they already had in mind.

For example, you say, “We have to invest in commodities.” You sort of know who you want to go with, but just to make sure that you get yourself well educated, you meet a few other commodity managers to basically enrich your view, to justify, or to maybe disqualify that decision that you already made. A lot of managers get used for that extra education. That’s the second reason why just the number of meetings isn’t enough.

Another one that I’ve been through more than I want to admit is where you take the meeting because let’s say you have a few junior people around and you’d really like them to learn the ropes on how to interview managers. How great it is that the manager is coming to Milan so you can throw the junior in the meeting, to give him some target practice? It happens all the time. This is the playbook. You’re flying out to Milan. “Oh, we’re going to see the fund selector.” Then last minute, he got tied up and you have a junior sitting in front of you. You’re actually sort of helping them with their education. You can build a relationship with a junior, because when the caterpillar becomes a butterfly or the snake becomes a dragon, it’s good to know the dragon. But that’s really not on the radar right now. That’s I guess another reason.

Then finally, you know what else happens? People just get bored with their job and they just like to hang out in the meeting room and get a free lunch. This is universal, especially in certain countries where business lunches are a tradition. Having a nice free lunch at a nice restaurant every day is a nice perk to have. That’s the reason why qualifying your prospects is so important.

How do you qualify your prospects? Well, I’m afraid you have to do a little bit of work. Thankfully, if they’re a fund buyer or they’re a pension fund or a foundation, they’re obliged to publish what’s in the portfolio. You really better spend some time doing some research. “Are these guys effectively allocating to this asset class?” If you see more than two managers, then the game is on because, yes, they are allocating and they’re obviously looking to diversify. They probably want to talk to you for a reason. If you’re struggling with doing the research, then we fall back to that previous advice we gave on make sure that your meetings are just trailers.

Another way, which is rare, which I really encourage also, is just do your first meeting on Skype – or on whatever web platform.

I was at the fund forum in Berlin on Monday. I’m telling you, a lot of my friends there are fund buyers that I’ve been working with for a long time. They’ve gotten over it. They like the web meeting thing. It’s perfectly okay. I mean, if they’re serious about allocating the funds, for them it’s a very effective way to also disqualify or qualify the right fund managers. It goes both ways.

Matt:

Let me back up to a case that you mentioned a couple minutes ago. You were talking about, for example, “I represent an African fund, and I’m going to Milan and I’m meeting with some-”

Baldwin:

That’s exactly my story.

Matt:

Yeah. “I’m meeting some potential investors, and they just want to learn more about investing in Africa.” How would I qualify them?

Baldwin:

That’s the thing. If you can do the research and see if they have … Usually when they go to Africa, they’ve been very active in emerging markets before. That’s already an indicator that there’s a real business case. That’s the most obvious way to look at it. Look at their portfolio. If you look at their portfolio, you can see if they are willing to think a bit out of the box. How many alternative strategies do they have? Things like that. You want to look at how exotic is the appetite of my investor? I’ve been there. What you described was my life. “Go and propose Africa to a fund allocator.” You definitely wanted to make sure that they either have a fund that has to invest in Africa, or they have an allocation to it, or they do have a habit of investing in exotic asset classes.

With this example, the real-life thing, I’m serious. I’m not kidding. We said Milan, and we said Africa. I found out later that two of those guys that I regularly met with were married to African women. I don’t know, maybe it was just general interest. No, I have to be fair. Because of that, one of them actually invested because he went to Africa quite often, and he just knew that there was something going on there. It could be. There could be something about this that has nothing to do at all with investments.

About Matt Krause

Matt began his professional life as an import buyer, and since 2006 has been teaching companies how to connect with their investors and clients better. His clients work in Istanbul, London, and Madrid for companies like Allianz, 3M, P&G, Citibank, and Reckitt Benckiser. He also walked across Turkey and wrote a book about it.

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The mistake: Putting the wrong person up there on stage.

Summary:

At a conference, the speaking gig often goes to the CEO.

However, that’s not necessarily the best person to represent your company.

The best person to represent your company is the one who can convey your message the best. The natural stage animal.

And there’s another reason to think twice before putting the CEO up on stage:

The CEO is often too busy to make the slide deck. So the CEO is often operating at only 70% efficiency up there on stage, because he (or, increasingly, she) is busy thinking about the next few slides, rather than giving everything to the slide that’s currently on the screen. The audience can feel the disconnection and senses the confusion, even if it doesn’t know exactly where the confusion is coming from. Your company ends up looking disconnected and confused, even though it isn’t.

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The full audio:

About Baldwin Berges

Baldwin has been active in the investment industry for more than 20 years. His specialty is all about positioning investment opportunities so they are easy to understand and developing strategies and systems to convert more opportunities into business during long sales cycles.

• 
• 

About Matt Krause

Matt began his professional life managing inventory levels for wholesale import companies and forecasting labor costs for national retail chains. Since 2006, he has been teaching professionals how to present themselves and their companies better. His clients work for companies like Citibank, Allianz, 3M, P&G, and Deloitte.

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Transcript of the audio:

Matt:

Let’s move on to point four. What would you like to talk about?

Baldwin:

We’ve been to many conferences, and we’ve seen a lot of these speakers from the fund management industry. It’s almost like you have to go to the opera, where you have to bring those tiny binoculars with you so you can actually see what’s on the slides. Did you ever get that feeling?

Matt:

Oh yeah, unfortunately.

Baldwin:

I have it all the time. It’s not only in fund management. It’s everywhere. There’s two big mistakes when it comes to showcasing yourself at an event. The first one is a lot of companies don’t spend enough time on figuring out “who’s our best presenter? Who is the natural stage animal, here?” You see it all the time. The flawed rationality of showcasing yourself during a presentation at an event is typically it goes in order of pay grade or rank. The CEO is the first candidate to be on stage. If the CEO can’t make it, well maybe you’ll have the managing director or whatever, and it just goes down. That’s just completely flawed. What you should do is, “Who’s our best actor here? Who is the best presenter?” Nobody cares about the person on the stage, really. What they care about is the message. That is something that is baked into this industry. Those who figure out who their best actor in the house is, should get the lead role on the stage like that. It’s not even about the glory of the speaker. It’s about getting your message out to the audience. That’s the first thing.

As a result of this flaw, what you often have is people jump on stage and they have this typical slide deck. Again, it’s like in the previous conversation that we had, they want to convey as much information as possible. It’s from that scarcity attitude. You have a guy on stage who’s reading off bullet points on a slide, and there’s way too many graphs on there. The audience is trying to figure out whether they should listen to that person or look at the slides. It gets even worse when the two elements are speaking about the same thing. You really get confused as an audience. “Where should I look right now?” Worst of all, often because of compliance department reasons and legal reasons, a lot of these slide decks have to be vetted, and therefore, they’re often made not by the speaker but by someone else. The speaker doesn’t really own the talk. People can feel this dispassionate or disconnect that the speaker has with the material.

It’s a massively missed opportunity. You’re the presentation expert here, right? I think if anything that I’ve learned from you is that you have to evoke an emotion in an audience. Also I think you just have to give them something to really think about and work with in their mind. You can do that in 10 or 15 minutes. You can choose one or two topics to ignite that thought process in the audience. I think there’s a missed opportunity there.

Again, keep it simple when you’re on stage. Convey the kind of message or maybe ask the audience, present them with a massive question that will get their minds involved with it. Next thing you know, they’re going to be thinking about you a long time after your presentation. That’s exactly what you want.

Matt:

I want to ask you a question about something that you said a few minutes ago. You were talking about the disconnect between a slide deck that might be made by someone else, maybe in the communications department or the marketing department or something like that, and then the presenter who’s actually up on stage might not have seen it before or has spent very little time with it. If I’m a company, let’s say I’m company XYZ, and I have the option of doing that or putting the person up on stage who, he’s a great speaker but he makes terrible slides. He doesn’t have a whole lot of graphic sense at all. Is a great speaker with a bad slide deck better than a great speaker trying to speak to a slide deck that he doesn’t even understand? What are your thoughts on that?

Baldwin:

I think the problem is I guess that you’re using that opportunity to speak, again to cram in as much information as you can. That’s the thing that you really have to avoid. Regardless if your policy is not only the CEO speaks when he can or we have our best actor on stage, your best actor on stage may not be as knowledgeable about the industry trends as the CEO, but the CEO may be too busy to really internalize the talk. There’s two weights that in a way balance each other out. I think often it’s about the topic you choose. Maybe it should be just one topic or two topics, something that is also compliant. For example, as long as you’re going to be speaking about precise investment opportunities or you’re going to be giving what could be understood as an investment recommendation, of course your compliance department is going to have to know what’s going to be done there and what’s going to be on the screen.

But if you talk about things that are not per se investment recommendations but are adjacent to that … For example, let’s say you’re a European equity manager. There’s hundreds of European equity managers. You can go and talk about financial investment themes, or you can maybe zoom in on, “What is Europe’s competitive advantage in the world?” Then you can maybe present them with a little bit of research. “Look! I bet you didn’t know that for example in Europe we have the biggest manufacturing of X type of product.” You could bring something about the European industry perspective, without even saying a world about investing. Guess what? The audience is going to say, “That’s really interesting and useful. These people seem to know what’s going on with European companies. Guess what? Maybe they should be selecting companies for me to invest in.”

You don’t have to spell it out. People aren’t really that stupid. I think it’s more like how can you find something that is compliant, or doesn’t need to be involved in compliance, which can equally be brought by a CEO or by a good actor, who’s not as senior as CEO. I think that maybe is the golden combination here.

About Matt Krause

Matt began his professional life as an import buyer, and since 2006 has been teaching companies how to connect with their investors and clients better. His clients work in Istanbul, London, and Madrid for companies like Allianz, 3M, P&G, Citibank, and Reckitt Benckiser. He also walked across Turkey and wrote a book about it.

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The mistake: Trying to go all the way on the first date.

Summary:

You get the meeting, it’s in the diary, and you walk in there with your big pitch book. You’re excited, maybe a little bit nervous. Gotta land this client!

But slow down, cowboy! You wouldn’t realistically expect to go all the way on a first date, and you’re not going to go all the way here, either. Cover your main two or three points, and then get out. It’s perfectly fine to leave some questions unanswered.

Practice it in front of the mirror until you are blue in the face: “Can we come back to this? I’m terribly sorry, but I don’t want to be late for my next meeting” (say it even if you don’t have a next meeting).

Our moms said it best when they told us growing up, “Leave them wanting more.”

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The full audio:

About Baldwin Berges

Baldwin has been active in the investment industry for more than 20 years. His specialty is all about positioning investment opportunities so they are easy to understand and developing strategies and systems to convert more opportunities into business during long sales cycles.

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About Matt Krause

Matt began his professional life managing inventory levels for wholesale import companies and forecasting labor costs for national retail chains. Since 2006, he has been teaching professionals how to present themselves and their companies better. His clients work for companies like Citibank, Allianz, 3M, P&G, and Deloitte.

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Transcript of the full audio:

Matt:

Shall we move on to point number three, or do you want to dive into this a little bit more?

Baldwin:

Again, I think we covered it. I think you can get really creative on how to merge that followup with the learning curve. The good thing is it’s a lot more fun and a lot more inspiring to do than just having to chase down prospective investors to see if they’re ready to write the ticket. If you’re willing to play with it, it makes your job as a salesperson a lot more fun.

Matt: True, true. How about point number three? What’s on your mind?

Baldwin:

I think we sort of spoke about that in our previous conversation about not being aware of the client journey and how we can follow-up merging that with the learning curve. Managers want to go all the way on the first date.

You get that meeting, it’s in the diary, and you walk in there with your big pitch book. Somehow in a lot of manager’s mindset it’s like the successful meeting is where you got to tell them the full story, where no stone was left unturned.

I think that comes from a time where we didn’t all have all the communication tools that we have today, and you definitely got less of an opportunity to communicate with these people. The remnant of that is that we still sometimes fall into that mindset of having to go all the way on that first date.

I think a good first meeting should be very much like a trailer, or the first episode of a series. A good first meeting, actually it’s fine to leave certain questions unanswered. It, again, creates that sort of a cliffhanger or Inception effect, where that prospective investor will want to know a bit more.

I’m not speaking about trying to manipulate them or anything like that. It’s just being aware that they are just human beings who have a lot on their plate. You probably want to make things a little bit more digestible for them.

A good way to do that is by first, before you actually engage with a new prospect, have a script that you can follow. If they keep on asking you questions, that’s obviously great.

It’s also I think absolutely fine to say, “Can we cover this next time? I’m afraid I have to get to another meeting.” That works like gold. If you’re doing it right, it actually should be true. If you’re a well-organized salesperson or a fund manager, it means that you have slots in your week where you do meetings. It’s fine to be able with a straight face to say, “Can we come back on this? I’m terribly sorry, but I really shouldn’t be late for my next meeting.” That’s a very elegant way to do this.

Matt:

When you say something like that, basically “we’ve got to wrap up here because I have to move onto my next meeting.” When you do something like that, does it create some sort of emotional effect in the audience’s mind?

Baldwin:

It depends. Let’s say you’ve come in to do the whole story, and then you realize you’ve been ranting too much and there’s not enough time and you abruptly have to end that. That’s going to be irritating for both sides because that’s just very clumsy. That’s why it’s so important to have a script. In the first meeting, what are the two or three most important things that this person should really know about it? What distinguishes us? Just cover that.

Then if that was your agenda and you’ve been able to deliver that, then you can transition out of that meeting by saying, “I hope this makes sense. We’d love to tell you more, but the truth is that we really have to get to another meeting on time. I hope we can continue this conversation.” That’s a very elegant way to segue out of it, right?

Matt:

Yeah. If you segue out of it that way, what are some good candidates for things to leave them hanging on, questions to leave unanswered? What are some good candidates for that?

Baldwin:

It depends on a case by case. If you have a special investment process that distinguishes you, I think one of the nice things that you can do is just give them a heads up of why it’s so special and then maybe leave that hanging as to exactly why, to get into more detail. You have take a close look at what your USP really is and then play it on that.

In the last few years, I’ve found most of my inspiration for anything I do marketing-wise in the entertainment industry, in the movie industry, because they’re so good at keeping our attention. I think you have to think of it as a trailer. The trailer gives you enough information for you to make up your mind whether this is going to be a movie that you want to see or not. It has all the ingredients more or less on the table. You just don’t know exactly what they taste like yet, but they look appealing. The same is true for editors as well, when they’re going to publish a new book. They make sure that there’s enough teaser content out there to make you really want to go and pick it up.

I think you have to think about it like that. Give them a sort of hint of there’s a lot more where this came from. Another thing about wanting to go all the way on the first date is also the flawed … We’re going to speak about that in another conversation more in depth, but it’s where you have a bit of a scarcity mentality.

You think, “Anybody I meet with, I should try to convert into a client.” Whereas that first meeting should also be a qualifying exercise, where both sides – both you and the investor – should figure out “is there a match here?” If this were Tinder, whether you swipe left or right I guess it would be. That’s what that first meeting should be.

About Matt Krause

Matt began his professional life as an import buyer, and since 2006 has been teaching companies how to connect with their investors and clients better. His clients work in Istanbul, London, and Madrid for companies like Allianz, 3M, P&G, Citibank, and Reckitt Benckiser. He also walked across Turkey and wrote a book about it.

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The mistake: Rushing their investor.

Summary:

You went through a journey to learn what you know. Way back when, it was uncharted territory for you.

Your investor is venturing into uncharted territory now, too.

So give him some time. The things you think are obvious, your client doesn’t see them as obvious yet. If you explained them well, he will see them as obvious later. But he’s not there yet.

So give him some time. Merge your followup with his learning curve, which probably looks a lot like yours did, way back when. Don’t just pounce on him with “Hey, have you thought about this yet? Are you ready? Huh, are you ready?”

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The full audio:

About Baldwin Berges

Baldwin has been active in the investment industry for more than 20 years. His specialty is all about positioning investment opportunities so they are easy to understand and developing strategies and systems to convert more opportunities into business during long sales cycles.

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About Matt Krause

Matt began his professional life managing inventory levels for wholesale import companies and forecasting labor costs for national retail chains. Since 2006, he has been teaching professionals how to present themselves and their companies better. His clients work for companies like Citibank, Allianz, 3M, P&G, and Deloitte.

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Transcript of the full audio:

Matt:

Do you want to move on to the second point, or do you want to dive deeper into this one?

Baldwin:

Let’s go on. We can beat that horse to death, but it’s dead, right?

Matt:

Yeah. Let’s move on to point number two, then. What’s on your mind?

Baldwin:

Again, what I’m saying here, Matt, is always about mistakes that I made myself for so many years. When I sort of got a little bit more enlightened about how we can do this alternatively, it just became very clear to me. One of the big mistakes that I also see being made and I made myself is that we’re not aware enough of the client journey that our final investors are going through. For example, an investor may never have invested in what you do. There’s a bit of discomfort from onset. It’s exotic, it’s unknown, and so they’re venturing out into uncharted territory. What I see is that what happens is you do this pitch for the first time, and the gatekeeper or the investor says, “This is really interesting. Thank you.” A lot of fund managers are like, “Okay, he’s ready to buy. Now we just have to follow up.” What they do is then they just harass them and say, “So have you thought about this? Are you ready? Have you thought about this? Are you ready?”

You do have to followup in this industry. If you don’t follow up, you’re not going to get the business because everybody gets distracted, and everybody has a lot of work to do. You are rendering a service by following up, but you can make this followup much more useful by merging your followup with your investor’s learning curve. That means that you probably want to make sure that you write out some sort of a script. Then you say, “Okay, let’s follow up and let’s tell them a little bit more about this. Let’s follow up again after a few weeks and tell them a little bit more.” I think what you’re doing then is you’re sort of helping them get comfortable with your investment proposition and also making them more comfortable with you as a manager. They also have to get to know you. They want to have a feeling how your team thinks, what matters to you, all those kind of human things.
Instead of just harassing people until they give you a yes or a no, there’s a massive opportunity to structure a followup as a learning curve. You can do this the old fashioned way, which is time-consuming and expensive – basically having a script for every time you go and meet them again, you have something new to say to educate them.

Or you can actually use technology for this. Like what you and I do, we have this email that is automated and with a fixed interval you give them a little nugget more. That’s also a good way to stay on top of mind.

Matt:

There’s an alternative train of thought that I want to run by you and see what you think about it.

Baldwin:

Sure.

Matt:

Sometimes people say during the followup process, instead of dripping out another nugget of wisdom or helping them along the journey, that instead your correspondence or your emails should get shorter and shorter until eventually it’s just a subject line that says “Status” and you don’t even say anything in the body of the email. What do you think about that approach?

Baldwin:

If you’re a good copy writer and you can actually do that, it’s amazing. It sounds interesting. I’d like to explore it, how it’s done. What I basically think is that, in the investment industry, you’re never really going to force someone to buy anything or to invest in something. What you can do is, you can just make them more comfortable to make the decision. There’s nothing that makes people more comfortable than the peace of mind of knowing what they’re getting into. It’s all about offering education. Frankly, the way I approach this is I think you have to balance out you obviously have to transfer knowledge but still make it consumable. If you’re writing long essays, nobody is really going to have time to read them. You can do this in short nuggets. You don’t always have to give them all the information. I think it’s all about triggering thoughts in their minds. It’s like the Inception effect. When they can fill in the blanks, they’re going to become more of an owner of your idea. Their own mind is working on completing your sentences, in a way. I think that’s very powerful.

The best thing about modern marketing is that if you have an email list, then you can monitor who’s paying attention. If you’re five or six emails down the sequence and you see that, “Look, Mr. A and Mr. B and Mrs. C have been reading 60% of my emails. Hey, there must be a reason for that.” It also allows you to disqualify certain prospects. You may want to say, “Okay, look, I’ve been sending you through emails. Is that maybe not a good way to followup on you?” If they don’t really know who you are when you followup with them, then you definitely know they’re not qualified as prospects. I think it’s a little bit about helping them gather enough courage to want to try something new.

Matt:

Before we move on to point number three, let’s back up a few minutes. You mentioned, after your first meeting, that’s a bad time to start peppering them with, “Hey, what do you think? What do you think? You gonna buy? You gonna buy?” Tell us, in those first few days after the initial meeting, what might be going through the minds of the target customers?

Baldwin:

What might be going through their minds? If we stay in the institutional space, where you’re dealing with a fund buyer or an institutional investment allocator, what you do know is that they’ve probably taken three or four more meetings on that day, and the day after, and the day after, and the day after. They’re absorbing a lot of information from a lot of managers all the time. It’s not like you’re unique because you had a meeting with them.

You sort of fade away in the noise of information.

Bearing that in mind, in the beginning you have a few freebie opportunities to followup. The first thing is: “thank you for the meeting.” When you do that meeting, promise to share something with them so you have another reason to followup with them. “By the way, as we promised, we promised to share this with you.” You can do that. That’s maybe just another follow-up. Then, as soon as possible – provided that your content isn’t too time-wasting, TLDR (too long, didn’t read) – just make sure that you can prove from onset that you’re willing to help them understand this better.

About Matt Krause

Matt began his professional life as an import buyer, and since 2006 has been teaching companies how to connect with their investors and clients better. His clients work in Istanbul, London, and Madrid for companies like Allianz, 3M, P&G, Citibank, and Reckitt Benckiser. He also walked across Turkey and wrote a book about it.

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The mistake: Not equipping your investor to argue your case to the other investors.

Summary:

You’re an expert, and the person you’re speaking to is probably also an expert. So it’s tempting to get lazy and stay in your expert comfort zone.

But remember, you are not just speaking to that person. You are also speaking to the other people that person will need to speak to in order to get your investment approved.

And many of those other people will probably not be financial experts. In fact, most of them probably won’t be. They might be on the board of trustees because they are experts in something else, like corporate governance, or maybe because they got rich owning a factory, or selling a consumer product of some sort.

So in order to get the approval you need, you need to not only speak to the person in front of you, you need to equip that person to speak to the other people on the board.

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The full audio:

About Baldwin Berges

Baldwin has been active in the investment industry for more than 20 years. His specialty is all about positioning investment opportunities so they are easy to understand and developing strategies and systems to convert more opportunities into business during long sales cycles.

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About Matt Krause

Matt began his professional life managing inventory levels for wholesale import companies and forecasting labor costs for national retail chains. Since 2006, he has been teaching professionals how to present themselves and their companies better. His clients work for companies like Citibank, Allianz, 3M, P&G, and Deloitte.

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Transcript of the full audio:

Matt:

Let’s touch on the first big mistake that you see fund managers making.

Baldwin:

I think one of the things that I see a lot – and I’m guilty myself of having done – is where, in the asset raising process, you forget about the end client and you forget about the stakeholder. Let me explain what I mean by this.

It has to do with that thing you and I talk about all the time, which is “the curse of knowledge,” which means that we’re very close to our knowledge. We’re experts. On the scale from 1 to 10, we’re at 10. Typically as fund managers, we speak with qualified professionals, such as private bankers and/or fund selectors. These people are very well schooled in everything that has to do with funds and investments. Fine. They probably do know what we’re talking about, even though we throw in a lot of complex jargon. They probably get it, but I think what a lot of managers are forgetting about is that what we’re doing by speaking to these people, we are in a way delegating them to carry the story onto the end client.

In the institutional realm, that end client may be people who are on a board of trustees. It doesn’t mean that they’re financially literate. Most of the time, if it’s a pension fund, half of the board are not investment people. They are people who are tasked with overseeing good governance in the pension fund, from a non-investment perspective, or they could be honorable members to give the board more cachet. It doesn’t mean that they’re financial experts in the private wealth realm. These are just affluent people who have been able to make some money. It doesn’t mean that they know everything about investing. Maybe they have a few factories that brought them a fortune, or maybe they sell whatever product it may be. The fact is that they have amassed a fortune and they need someone to take care of it. It doesn’t mean that they have all the knowledge.

I think what we’re doing is we’re missing an opportunity by keeping our pitch at a very high level. What they should be doing is, they should really be able to explain it, despite the fact they’re speaking to a professional, in terms that are plain and simple. This person that they’re speaking to, that gatekeeper, is going to have to gather the courage to be able to represent your story to that end user. The thing is, you’re not the only one they’re talking to. Since most managers try to impress the gatekeeper by using complex message and proving that they’re a true professional, they’re all going to sound the same, until that one manager comes up and gives the gatekeeper and makes his job very easy, to then convey that message to the end user.

Imagine: the gatekeeper now has to go to his investment committee, or he has to go and meet with his end client. He wants to make them a proposition. They’ve met you because they’re interested in allocating to your strategy in the first place, or a type of strategy like that, but now you’re going to make his job very easy. Guess who’s going to be top of the pile on the recommendation list? It’s going to be the manager who made it very simple for him or her to explain why they should be allocating to this strategy. It’s really avoiding the risk of your message getting lost in translation, by keeping it really simple. It’s gold, but it’s so difficult to do, Matt. It makes us feel stupid to speak like that. For us, keeping things simple makes it a little bit dumb. We’re worried that we’re going to be laughed at by that other professional sitting in front of us, where in fact we’re probably doing them a big favor.

Matt:

Let me see if I’m understanding you correctly. If I’m person A and I’m speaking to person B, you’re saying that I not only need to communicate clearly to person B, I need to equip person B to go out to persons C, D, and E and sell my case. Is that what you’re saying?

Baldwin:

That’s absolutely right. Actually, you said it better than I did. That’s absolutely what it is. It’s just making your message very transferrable, easily transferrable. That intermediary or gatekeeper, at the end he does or she does have to stick a neck out for you by recommending you. Make that easy.

Matt:

If I’m person A then, not only do I need to know my customers – person B – I also need to know how my customers’ customers think. Is that correct? That would help me a lot?

Baldwin:

Well, that helps, but it’s not always possible. It’s sort of like when you walk into a mixer or a cocktail party. There’s probably a version of what you do that you can use there, to make sense to somebody who’s not from your industry. In fact, your presentation should sound very much like that. The way to execute it is not only in how you tell the story, but at least have your website or your marketing materials simplify that message so it’s very easy for them. In today’s world, how this really happens practically is one day, for example, when you’ve made it quite simple to understand what you do, chances are that that intermediary or that gatekeeper is going to send someone a link, “check this out.” It really matters what’s on the other side of that link. At least make sure that your marketing collateral explains it in very simple language.

About Matt Krause

Matt began his professional life as an import buyer, and since 2006 has been teaching companies how to connect with their investors and clients better. His clients work in Istanbul, London, and Madrid for companies like Allianz, 3M, P&G, Citibank, and Reckitt Benckiser. He also walked across Turkey and wrote a book about it.

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