Publications

Roundtable: What is the most effective way for managers to successfully introduce their investment products to your RIA?
- July 1, 2020: Vol. 7, Number 7

Roundtable: What is the most effective way for managers to successfully introduce their investment products to your RIA?

by contributing executives

Richard Hough, CEO, Silvercrest Asset Management

First and foremost, our firm seeks to develop long-term relationships with managers. It takes time to get to know us when introducing capabilities. While our manager search effort harnesses quant models, our selection process is mostly informed by personal field work, with our team averaging 400-plus manager meetings per year. The team doesn’t chase results and expects managers to clearly describe how a well-conceived, efficiently-executed investment process adds incremental value over time. Managers should be prepared to defend, on a granular and fundamental level, what actually has driven results. Our separate due diligence team has unquestioned veto power over any manager selection and will step away with even a whiff of discomfort as to a manager’s operations.

 

Eric Kittner, managing partner and board chairman, Moneta

Developing a relationship is key. It’s essential for managers to know and understand our clientele, business model and philosophy before making any recommendations. We look for managers focusing on how something might be additive to portfolios and gauging interest on future strategies. Managers just touting performance, particularly in the short-term, are likely just trying to sell something and aren’t really interested in a partnership. The biggest red flag is a blast email touting funds that are closing soon or have limited capacity. Our client relationships are long term, and we seek that in fund managers as well.

 

John Hyland, co-founder and managing director, Private Advisor Group
We use three simple criteria: 1. Does the product solve a problem or create an opportunity for the adviser and/or client? Any product we consider passes the first test of being developed with the adviser or client in mind. 2. They must have a quality reputation in their respective area of expertise. We partner with those firms who have the highest expectations of themselves and their clients. 3. They must be a good cultural fit for our firm: We help advisers grow their business, focus on their clients and do the right thing — at a reasonable price.

 

Larry Roth founder and managing partner, RLR Strategic Partners

As managers approach RIAs, they should remember that, as fiduciaries, RIAs focus on safeguarding their clients’ best interests. This entails evaluating product performance, risk and fees, while also asking deeper questions: Does the manager have a good reputation? Does the investment team have long-tenured professionals with experience managing uncertainty? Most importantly, is the manager worthy of the trust of RIAs and, by extension, their clients? So long as managers embrace the obligation RIAs have to their clients’ best interests and accept it as their own, they will find receptive audiences for their products.

 

David Sher, co-founder, Greenbacker Renewable Energy Co.

We see significant opportunities for RIAs to better connect clients with financial products that best align with their goals by providing greater transparency up front on what they need from asset managers. RIAs should clearly specify their desired asset types, product-diligence data and communications preferences from the outset of any asset-manager dialogue. These RIAs will be well positioned to cut through the excess noise in the product space while elevating the client service experience they offer.

 

Jon Bren, investor and consultant, KBS

As an investor into alternative investments for the past 30 years, I review the “investment opportunity” based on specific goals and parameters. I always ask, “What is the best risk/reward profile for a desired target return?”  — followed up by, “What is the liquidity timeline that I have to accept in order to try and achieve that desired target return goal?” The dislocations created in the financial markets in first-quarter 2020 have created many investment opportunities. The key for me as an investor is being presented investment opportunities that are actionable now. Those opportunities can be in private or public real estate and related securities, private equity restructuring, capital structure arbitrage, volatility arbitrage, etc.

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