How to Impress Investment Consultants

A key component of fund management is being able to impress investment consultants. These individuals advise the world’s largest allocators, and impressing these people can lead to access to institutional capital. But failing to impress them can lock them out of lucrative partnerships. The term’sucking up to the gatekeepers’ isn’t new. In fact, it’s been around for centuries, but it’s never been more relevant.

While the majority of big brokerage firms are filled with so-called “fiduciary” advisers, these individuals are not really the best choice. Most of them sell on-platform products with embedded fees. As a result, they have conflicts of interest. Look for warning signs of this, such as the consultant’s reliance on a third-party research firm or investment adviser. In addition, get documentation of the consultant’s total sources of revenue and the amount of money he/she earns from these sources. Only accept hard-dollar fees from clients.

Some investment consultants charge a fee for their services. However, you may be able to negotiate a lower fee for the same service. Most investment consulting firms offer a free trial period, and this will ensure that you get the best value for your money. Most firms will allow you to meet with a consultant before you make a decision. But if you can’t afford this, you should consider a different type of consultant.

Some asset managers try to circumvent investment consultants by appealing to investors directly. But such tactics often hurt the relationships between the two parties and reduce the likelihood of them winning business. For instance, the CEO of a hedge fund might ask an investor to facilitate communications with the consultant – despite the fact that he wants to avoid alienating the consultant. Sadly, this type of behavior is not uncommon and has contributed to the strained relationship between managers and consultants.

Using an investment consulting firm is not an easy process. In fact, the biggest firms are flooded with so-called “fiduciary” advisors. Most of these advisors sell on-platform products and have embedded fees. While being a fiduciary is a valuable credential, it doesn’t protect you from conflicts of interest. Instead, you should look for red flags and ask for documentation. Obtain documentation of the consultant’s total revenue sources, which should be included in the annual 408(b)(2) disclosure. If the consultants are not transparent, don’t work with them.

Investment consultants should have strong analytical skills and an understanding of how investments work. They should have excellent interpersonal skills, as well as strong knowledge of various markets. Ideally, investment consultants should also be familiar with the financial and tax implications of alternative investments. These professionals should be familiar with the risks involved in investing, and have a clear grasp of their clients’ needs and goals. They should be able to offer sound advice and guidance on which products are best for them.