The sales executives in our firm call on the asset owners and the consultants in their geographic territory. We are wondering if we should have individuals dedicated to the consultant channel who would be responsible for all the consultants regardless of location and then have the other sales executives focus only on the asset owners in their territory? What do you think?
Should we have separate sales teams for asset owners, consultants?
The quick and simple answer is “yes,” you should have a dedicated sales and/or relationship management team that focuses solely on the consultant channel.
The investment consulting industry is going through an interesting transition. The asset consulting industry as we know it had its roots in the late 1960s as teams or groups spun out of brokerage firms that had set up separate entities to deal with investment issues their corporate clients had, predominately relating to their defined benefit plans and their savings plans. The industry grew robustly as consultants' objective, third-party advice and counseling was welcomed by the internal investment groups at these institutional funds.
Today, the investment consulting industry is expanding in some areas and contracting in others. We have witnessed a spate of acquisitions and consolidations as the industry begins to rationalize its product offerings, its own target markets and pursues scalability while attempting to increase margins and altering revenue models. Thus there may be fewer but larger investment consulting firms in the future that the money manager is going to have to work with on behalf of their mutual clients, the asset owners. In other ways the consulting industry is expanding in that the asset classes and variety of investment vehicles are growing, the markets are now truly global and the consultants are expanding into investment management through the offering of funds of funds, manager-of-managers programs and establishing themselves as an outsourced CIO (see P&I's recent round table on investment outsourcing).
Moreover, investment consultants are now involved at varying levels of intensity with more than 80% of the searches being conducted for new investment mandates in the U.S. It is imperative that you populate their proprietary performance databases, that you carefully yet completely respond to RFPs and RFIs and that you identify the appropriate individuals in consultants' research departments so your firm's products and investment professionals can be introduced effectively and efficiently. Important, too, is the fact that there is an unprecedented amount of turnover in consultant assignments by the asset owners. This firing/hiring cycle that is going on will provide significant opportunities for your firm as the “new consultants” begin to restructure the fund that has just selected them.
You really need to think of the investment consultants as a discrete channel or target market with its own unique demands for data and information. Consulting firms are very idiosyncratic when it comes to how they want to be approached, what the appropriate periodicity is and what types of information they need and want. Knowing the consultants “in the field” is important especially for on-going relationship management once you are working with them servicing a mutual asset owner, but knowing the research team is certainly more important in the beginning of your relationship. Most consulting firms now have specialists by asset class or strategy within asset class and those are the people you need to get to know first and get to know well. They will then “sell” your products internally to the field consultants who deal directly with the asset owners. Thus there is a unique scalability for investment managers whose products are “approved” through the consultants' due diligence process.