In the asset management business, distribution, the process by which asset management firms compete for and retain assets, is increasingly being recognized as a key component to firm success

As the Boston Consulting Group points out in its recent “Global Asset Management 2017: The Innovator’s Advantage” report:

“Tomorrow’s industry leaders will appear quite different from today’s. To be among them, asset managers will need to seize opportunities to act boldly and transform the very way they work, through innovation that fully embraces advanced technologies such as artificial intelligence, machine learning, big data, and analytics. This will be especially true in investment management and distribution.”

Further, the report notes: “Players will need to become alpha shops, beta factories, solution providers or distribution powerhouses.”

eVestment’s five-step distribution framework outlines a strategic approach that can help firms identify and execute on opportunities efficiently and effectively and maximize chances to win new business and retain existing mandates.

This five-step framework – Planning, Presence, Perception, Pursuit and Positioning – is based on thousands of interactions, manager screens and other data points captured from investors and consultants using eVestment and on eVestment leaders’ discussions with top investors, consultants and asset managers from around the world.

For an asset manager, the steps start with Planning. And that means staying ahead of new mandates and working 18 to 24 months ahead to assess the industry overall and the manager’s product line up. In this fundamental research process, the asset manager must work to understand the strategies, universes and geographies that are growing in popularity, and assess if the firm has strategies already developed to compete. If it doesn’t, the firm must assess if it can develop new expertise and products to meet this anticipated demand.

Presence is taking stock of how the asset management firm is viewed in the marketplace currently. What is the firm saying about itself and its strengths on industry databases, in advertising, at trade shows, in social media and other marketing and branding efforts? Does that market awareness align with where the industry and/or the firm is or wants to move?

During the Perception phase, the asset management firm must gain insight into what the market values and how the firm measures up, then craft messaging to communicate appropriate strengths and explain, deflect or reposition any weaknesses.

When executing the Presence and Perception steps, an asset manager should assess the ease or difficulty of aligning the firm’s skills, messaging and reputation with new mandates that are coming available. If a firm is recognized as an equities strategies shop and the mandate is for a fixed-income manager, the effort to bring in or develop fixed-income talent, operations capabilities and more may simply be too much. And if it could be done, investors or consultants may find such radical repositioning unconvincing. In a cases like this, the manager may choose to not pursue some mandates as the cost in time and money is too high or the chances of winning too low.

These steps may also reveal that a more strategic, long-term repositioning is needed if a firm’s areas of expertise look to be falling out of favor for the foreseeable future.

In the Pursuit stage, the asset manager executes on the first three steps to prioritize and roll out sales, marketing, database management and distribution strategies that will put that firm in front of the investor and consultant with the mandate and give the asset manager the greatest opportunity to win that mandate.

Finally, the manager must Position the firm throughout the pitching and presentation process with the consultant and/or investor for the best possible result. This would include researching appropriate fees; studying the key decision makers at the investor and consultant; learning about key factors, biases or preferences that might impact a decision; and positioning the firm to align as closely as possible with what the investor and consultant is looking for, emphasizing the firm’s strengths and having answers for any perceived weaknesses. Studying public plan documents, social media pages (corporate and individual), reviewing media interviews and industry keynote speeches given by key professionals and more can be very helpful here.

These steps are outlined in more detail in eVestment’s distribution white paper, “The Distribution Excellence Framework: Five Fundamentals for a Disciplined Approach,” which is available by clicking here and on www.evestment.com. The concept was also detailed in a recent story in leading investment industry publication FundFire.