The following post is courtesy of Diane Harrison who is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 specializing in alternative assets.
A great story is hugely instrumental to selling your value to investors. Managers who are superior in skill set when it pertains to actual investing often find themselves struggling to convey that expertise to potential partners in a way that yields the same positive results they are used to getting. The reason? Spinning a good story takes a different talent.
Creating interest and educating your audience in a brief but memorable format requires a level of creativity and construct that many managers lack. Let me demonstrate what I mean through employing the technique right here to this subject. I’ll compare pitching investment management to weaving a blanket.
SPINNING IN A POSITIVE WAY
STEP ONE: MATERIAL CHOICE
A quality product begins with high grade material. Just as yarns come in varying grades of finish, warmth, comfort, and strength, so too do investment choices. Matching up the needs of the end user is crucial to the level of satisfaction and function the product will deliver.
Successful investment managers know who they are targeting their product towards and focus resources on influencing that investor group as a priority.
STEP TWO: DESIRED OUTCOME
Every good woven blanket follows a pattern. It can be a detailed, intricate design, a simple textural style, or some combination of both. In every case, the maker has a preconceived outcome, a plan, which they follow to achieve the result desired.
Investment managers, if they are disciplined and seek to manage other people’s money, follow a similar path. They have stated goals for the strategy, a repeatable and scalable approach and process that demonstrates their ability to achieve those goals over time, and management skills to operate their business within that game plan.
STEP THREE: EXECUTION
Weaving a blanket requires the synergy between warp and weft: the process which spins yarn into fabric. Only by integrating the two can a woven product be created. Working the plan, whether it be in weaving or investing, is the key to the best outcome for either effort. It takes practice, skill, fortitude, and patience to achieve superior results in both cases as well. When evaluating the quality of a woven blanket, you look to the uniformity of the weave, adherence to the pattern, finish level of the whole, particularly of the edges, which are most susceptible to stress, and the overall desirability of the finished product.
In the due diligence process of evaluating an investment approach, a similar process can be seen. Are the results of the past consistent with what they say they can do? Does the investment process flow logically from start to finish? Is the risk management plan just as robust? Are the management team and the investment team properly staffed for continued success?
STEP FOUR: REPUTATION
A well-regarded creative artist commands both respect and value from followers. In the world of woven blankets, authentic vintage Navaho blankets can fetch thousands of dollars, and are prized for both their artistry and their scarcity. A quality Navajo blanket can take up to a year for the weaver to weave, and some of the best were used both as blankets and door coverings due to their dense weave and quality construction.
Investment managers ultimately rely heavily on the reputation they build for delivering on their investment plans. They can command higher fees and increase their attractiveness to prospective investors based mainly on their ability to execute to plan and their integrity in managing other people’s money. Taking exceptional care of both results and reputation is paramount to the long-term success of every manager.
To summarize the analogy we began with here, the investment management pitching process bears an interesting similarity to the process of weaving. An investment ‘yarn basket’ needs to be sorted, have a pattern decided upon, and woven to plan. And the end result? Ideally a memorable way to create a bespoke, handcrafted story that is unique to your vision and prized by others.
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