Capital Raising Investor Education
Successfully attracting new clients hinges on telling a compelling, easily understandable and consistent story that inspires trust. Investors need to understand exactly what their asset manager is doing with their money, and why. Effective investor education efforts can shorten the sales cycle by three to 12 months*.
The investment management marketplace is growing at just 2 percent annually. Every prospective investor is critical. Do you know why prospective clients decide not to invest with you? The answer may surprise you. Too often, asset managers think investors focus primarily on their performance. Chestnut Advisory’s proprietary research shows that performance accounts for only about 15% of net asset flows**.
The other material factors driving net asset flows are directly related to investor education*. The No. 1 reason investors commit capital is because they have a strong understanding of the firm’s investment process. Rounding out the top five reasons are manager credibility; strong understanding of the firm’s risk management; confidence in the firm’s business structure; and clear, consistent communications. Performance clocks in at a distant six.
*Source: 2014 Chestnut Advisory Group LLC proprietary institutional investor survey.
**Source: Chestnut Advisory Group LLC analysis of historic eVestment asset flow and performance data.