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Institutional Client Prospecting and Pitching

Catrina Arbuckle, Mercer Investment ConsultingPhilip Robinson, Investit

February 1 2006

Institutional Client Prospecting and Pitching Cycle

Manager researchand selection

Pre pitch

Short list

Long list RFPs

Final presentation

Post pitch

Consultants significantly influence over

90% of selections


Pre pitch

Short list

Long list RFPs

Final presentation

Post pitch


90% of selections

New business conversion rates

Investit research: Over 100 respondents interviewed during 2005, representing over £100bn of pensions assets

Onto RFP long list without consultant

endorsement

18%

25%

35% *

75%

83%

Picked a winner without consultant

steerRFP long list to short

list

Presentation on the day critical

Consultant influence

* Significantly dependent upon type of mandate

Consultant influence important. Presentation on the day critical

from Long List RFP to winning final presentation

New business conversion rates

Investit research: Over 100 respondents interviewed during 2005, representing over £100bn of pensions assets

RFP long list to win - Gold

70%

45%

27%

14%

RFP long list to win - Silver

RFP long list to win - Average

RFP long list to win - Poor

Need for evidence on hit rates and decisions on where improvements can be made

Importance of RFPs

• “…the RFP is rarely if ever a deal breaker… ”

• “…we will not put a manager onto the short list if they miss the long list RFP deadline..”

• “…in any RFP there are usually between six and ten questions that are investment specific and bespoke. These are the ones that need highlighting and where the best brains need to consider the issues thoroughly… ”

• “… nothing annoys a consultant more than a manager not answering the question. It’s a bit like the A level teacher going on about it – answer the question posed and not the question you would like to answer…”

• “… RFP people are generally unloved in the industry and to get good ones is rare. Keep telling them they are good, that they had a role in new business wins, and that their writing skills are respected. Feedback is all for motivation…’

Manager research views dominate. RFPs hopefully verify these

Responses

Property RFP

Strengths

• Easily read

• Informative when opinion is solicited

• Clearly stock selection driven

• Clearly collegiate approach

Weaknesses• Philosophy is not spelt out

• What is the global research platform and how does it matter?

• Too modest about valuation skills

• Approach to risk unclear

• The credentials of new CIO and COO are swamped by the loss of predecessors

• Explaining interaction of team and specialists

• Claims benefits of membership of parent group with no evidence of gain

A real benchmarking example

10%

15%

0% 10% 20% 30%

It’s the 80/20 rule – better to leave well alone

Once on the long list – leave the short listing decision to consultant!

Would pension respondent accept calls before short

listing

Would consultant accept calls before

short listing

Pre-pitch calls

•What the pre-pitch calls need to ascertain (in order of respondent perceived importance):

• Areas of specific interest to trustee decision makers

• Who to represent the client and their motivations

• Timing of the meeting (steer on actual presentation time and Q&A)

• Seniority, calibre and number of people expected to present from manager (fund manager, client relationship, senior person)

• Likely questions to be posed

Pre-pitch calls important for establishing pre-pitch rapport and empathy

Up to 20 minutes. Someone with relationship and/or investment articulate

Who to undertake pre-pitchWho to make the pre-pitch calls?

20%

20%

50%

70%

75%

80%

80%

0% 20% 40% 60% 80% 100%

Salesperson

Someone from RFP team

Fund manager

Consultant relationship manager

Client relationship manager

Someone who will definitely be at firstpresentation

Someone who has relationship

Pre-Pitching.Who to make the calls?

Presentation – PETE’s law

Passion We want you

Enthusiasm We love what we do

Tailored We have thought about you

Example Tell stock stories

75% of the decision down to presentation on the day

Presentation protocol – what the best are doing• Rehearse, rehearse, rehearse

• Ensure presenting team chemistry

• Off copy, whites of the eyes

• Tailoring with specific examples – display empathy

• Team work from RFP to final presentation – engage investment experts

• Less is more – fewer slides

• 1 main point per slide

• Careful on technology

• Aural not visual audience

• Client tailoring (an IT brand company differs from public sector)

Top presentation tips (as given by two consultants)

“Short and simple”

•Your requirements

•Our experience

•Our size, clout, safe pair of hands

•We really want your business

“You Tarzan, me Jane”

• You

• Me/us

• Us/team

• Investment process

• Investment performance

• Employ me!

Six to 10 pages if possible. Marketing people to spot train spotters!

Post pitch

•Record keeping on who contacted and how effective an exchange

•Client Relationship Management (CRM) systems and inputting

•Assessment of effectiveness throughout the Client Prospecting and Pitching Cycle

• Immediate and ‘cool down’ debrief’ from prospect and consultant

The dignity of failure. Best not to go into denial and instead learn from experience

Finals Presentations Client Expectations

• That the consultant has briefed you with their requirements

• That you will provide stats/RFPs/requested information to deadline

• That they will meet the person that they will work with i.e. the CRM

• That they will also meet an investment bod be it Investment Specialist or Fund Manager

• That the performance stats in your presentation will resemble stats shown to them by the consultant

• That the consultant will prep them with appropriate questions to ask

• That you want their business

The consultant’s view

Things that work • Understanding the parent company and the personalities in the Trustee Group

• Tailoring the CRM and presentation accordingly

• Understanding how the group will come to a decision

• Being subtle if using your background knowledge of the client/group

• Knowing how many candidates have been short listed and where you are in the agenda

• Being honest (no really !!) and avoiding spin

• No-one ever lost a pitch because they were too brief (Bill Muysken – Mercer Global Head of Research)


Things that don’t work • Bad time management

• Not reading the audience

• Introducing yourself to someone from your own organisation

• Sending techies unless appropriate

• Sending “salesmen” unless appropriate

• Jokes or gimmicks unless you really think you know your audience

• Slating the competition in your presentation

• Turning up to the wrong venue

• Botching the Trustees arrival at your offices

• Annoying the consultant pre-presentation


Market move to preferred manager choice

•Trying to streamline the manager selection process at some consultants:

• Traditional approach - Used about 60% of the time. Long list dialogue and move to short list and final beauty parade

• Local authorities – competitive tender behaviour as enshrined by European law

• Short listing only – Used about 25% of the time

• Preferred manager choice – c20% of time at one consultant. Most efficient as less time. Also most expensive

Distribution changing. Meetings/RFPs more qual than quant

Research findings

Institutional Client Prospecting and Pitching Cycle


Pre pitch

Short list

Long list RFPs

Final presentation

Post pitch


90% of selections


Pre pitch

Short list

Long list RFPs

Final presentation

Post pitch


90% of selections

Questions

new business presentations

Business

consultant steer rfp

short list presentation

long list rfp deadline

silver rfp long list

average rfp long list

rfp people

final presentation

consultant endorsement