Performance matters. But when it comes to building client trust, two investment consultants say more is involved than pure returns.
Robert Olsen, a financial consultant to money managers and a former professor of finance at California State University, Long Beach, along with Elizabeth Prator-Ross, consultant with Callan Associates, San Francisco, came up with 15 goals money managers should work toward to develop long-term relationships with plan sponsors. They presented their list at the annual Crabbe Huson Contrarian and Value-Style Investment Management Conference in Portland, Ore., held in September.
The 15 precepts are:
* Style consistency. Institutional clients historically have considered process consistency among the most desirable attributes of their investment managers.
* Structure. When possible, investment managers should structure sales and client service functions by plan type and/or geographic location.
* Team structure. Investment managers should build teams tailored to the individual plan sponsors and communicate consistently with members of the team.
* No cookie cutters. Avoid the one-size-fits-all service mentality.
* Personal contact. The role of technology is to enhance, not replace, direct contact. Come face to face with your client.
* Educate. Provide educational sessions devoid of explicit marketing.
* Third parties. Keep consultants apprised of discussions with clients.
* Continuity. Organizational and personnel stability on both sides of the relationship is key.
* Firm's capabilities. Showcase the resources and benefits of the whole firm, not just the product.
* Modes. The basic modes of communication for building client trust include one-on-one meetings, monthly or quarterly newsletters and e-mails, research papers, quarterly conference calls, client conferences, web access and webcasts.
* Timely communication. Communicate significant market events and the impact before others do.
* Empathy. Treat the client as you would wish to be treated.
* Avoid distrust. Creation of trust is usually more difficult than creation of distrust because when something negative happens it usually is more salient than something positive.
* Confidence. A plan sponsor's confidence in investment managers' ability to safeguard and increase assets influences their perceptions of risk.
* Time. Trust takes a long time to build but can be destroyed in an instant.