Mistakes fund managers make – #1 of 5

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


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.

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.

Transcript of the full audio:


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


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.


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?


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.


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?


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.