Last week’s post on the softer side of investing garnered a question from an intrepid reader:

Just how does a manager go about building trust and a personal relationship with investors and prospects?

Excellent question, and since I regularly offer unsolicited advice on how to further capital raising efforts, one on which I am more than happy to opine. So with very little ado, here are MJ’s Top Ten Ways To Build Better Relationships With Investors and Prospects. While this list isn’t quite as funny as the Top 10 Bad Names for Businesses (, it may just save you from closing your fund to become the next franchisee for this business. 

Top Ten Ways To Build Better Relationships With Investors and Prospects


  1. Have conversations, not monologues. When you walk in to give an initial pitch or a portfolio update do you spend the majority of the time giving your spiel? Do you doggedly march through your pitch book? How much time passes before you ask your audience a question? Before you launch into your pitching soliloquy, ask your audience some questions about themselves, their portfolio and their investment goals. Pause on your table of contents and ask, “Here’s what I would like to cover today, what would you like to spend the most/least time on? Are there other topics you’d like to address?” Take notes, plan your time accordingly, and instead of taking your audience on a PowerPoint Trail of Tears, tailor the time you have for maximum & (most importantly) mutual productivity.
  2. Always tell the truth, even if the answer is “I don’t know.” This goes for you and your entire staff. I can’t tell you the number of times I’ve gotten one answer from a marketing/cap intro source and a different answer from a portfolio manager. Always remember: “I’ll get back to you on that.” is a perfectly acceptable reply.
  3. Put information about your staff and other support personnel in your pitch book and DDQ. We all remember the phrase “Two guys and a Bloomberg” from the good/bad old days of investing. Well, my friends, those day are gone (if they ever existed). No portfolio manager is an island and, whatever your stud duck fantasies may be, it takes more than one person to manage money. Not including the firm’s staff in a pitch book (including outsourced services) creates two problems for investors. A) They have to ask how tasks get done, which an investor shouldn’t have to wonder and B) it may make them think that the manager does not value their staff. Employee turnover, particularly in CFO, CCO, COO, key analyst and other functions, can be almost as devastating to a fund as manager turnover, so I worry both about hubris and employee satisfaction when I don’t see a pretty little org chart. With names.
  4. Talk about your background, but then, um, stop talking. I have met with managers who spent an entire meeting taking me on what seemed like a minute-by-minute tour of their professional bio. And don’t get me wrong: I care. I just don’t care that much. I can read your bio. I need to know what you see as the key inflection points and the highlights of why your background qualifies you to run the fund. I do not need an hour-long history lesson that starts off a la Steve Martin in The Jerk.
  5. Call before bad news arrives… A fund of funds manager friend of mine has one cardinal rule: Call me before you end up in the Wall Street Journal. I would add to that: Call me before a large, out of character loss. Call me when your entire market segment is blowing up. Call me if one of your peers is having public valuation issues and tell me why you’re not and won’t. Give your investors and prospects a heads up and they will come to trust you more.
  6.  …but don’t only call for bad news. If you only call when things are bad, investors develop a Pavlovian response to your phone calls. Call with good news once in a while (e.g. a really good month, a terrific new hire, a great new investor, you’re going to be on CNBC…).
  7. Talk about what you’ve learned and how you learned it. One of the things many investors want to know about a money manager is what they’ve learned and that they are capable of continued learning. If a particular drawdown or market scare made you change your strategy or thinking about certain scenarios, that’s great to talk about. A long time ago, a prior firm had an investment with a manager that experienced significant losses during a market meltdown. When we sat with him to discuss the portfolio, he talked about that period and said that if he had it to do over again, he would sell off the book and start over. When the markets went into the pooper (technical term) in 2000, the manager did just that. He was able to avert large losses, he showed that he could learn, and he gained additional trust because he did what he said he would do, all in one fell swoop.
  8.  Let people know what scares the pants off of you from a market or investment perspective. In 1999, I met with a famous money management firm to evaluate one of their funds for investment. I asked them about their worst market scenario and how they would react. They said that they couldn’t imagine a scenario where they wouldn’t see what was coming and get out of the way well in advance. Less than six months later they lost over 20% in one month. So much for that legendary foresight, eh? Every manager will lose money. Being honest about when and how a fund can lose money and how you plan to react lets your investors sleep better at night.
  9. Don’t hide behind jargon, buzzwords, or opaque language. At a “speed dating” capital introduction event many years ago, a frantic event organizer begged me to go into the room with a fund manager who was, um, lonely. It seems investors came to his sessions but quickly received urgent calls or emails and had to depart. I attended his session and quickly learned why. The manager didn’t want people to figure out his “secret sauce” so he talked in the most pompous, jargon-filled manner imaginable. I wanted to shank myself with my coffee stirrer within 15 minutes. Hiding behind big words, complex math and opaque terms doesn’t make a manager sound smarter. It makes them sound scarier and riskier. It means investors have to ask questions that make them feel stupid. Word to the wise: When you make people feel dumb, they seldom give you money.
  10. Know your client.  This goes beyond the B/D definition and fun compliance videos we've all had to watch and hits on a personal level. To the extent possible, make an effort to know key facts about every client. Where do they live? Are they married? Do they have kids? What do they like to do when they aren’t asking you every question on the AIMA DDQ? Being able to have an actual personal discussion moves your relationship out of simple transactions. Don’t underestimate the power of the personal connection. 

AuthorMeredith Jones