The Role of a 3PM

Last week my post was about the 3PM / Manager Relationship.  This week I will discuss the role of a 3PM and what we do to win assets.  

One of the most important jobs a 3PM has is to help its manager clients determine which investors would be most interested in their product offering(s).  This will determine the distribution channels the 3PM will focus its efforts in.  To determine this, we consider a variety of factors such as the product, the vehicle it is being offered in, the benefits and risks of the strategy, terms such as minimum account sizes and fees, tax implications and many more.   

Investors Types

Although there are 3PMs that work directly with individual investors – usually those classified as High Net Worth or Ultra High Net Worth Individuals - at Tessera we prefer to work with institutional investors including the following:

  •  public pension plans
  •  corporations
  •  endowments and foundations
  •   unions 
  •  sovereign wealth funds

Tessera spends most its time focusing on financial intermediaries or gatekeepers such as:

  •  investment consultants
  •  emerging manager platforms
  •  sub-advisors
  •  OCIOs
  •  family offices
  •  wealth managers
  •  investment advisers

We’ll come back to Gatekeepers after the holidays, because they play an extremely important role in the investment industry and they warrant an entire column devoted just to them.  But despite our focus on intermediaries, we also will contact institutional investors directly when it makes sense.  It’s all part of the strategy. 

The Sales and Marketing Process

Once we have identified who we are going to target, we develop a comprehensive sales and marketing campaign.  

Our approach begins by designing a full suite of marketing collateral, including presentation books, product summaries and quarterly reviews, that are used to illustrate the features of the product or service.   We want to ensure these materials to appeal to the buyers we are targeting in our sales effort. 

To get the word out to potential investors, we supply information on our manager clients and their products to industry databases which are used by investors and gatekeepers to evaluate and compare different product offerings.  While sometimes our manager clients are found through these industry databases, a direct calling program has proven to be the most productive way to get our manager clients in front of key decision makers.

A calling program is exactly what it sounds like – calling someone on the phone and talking about the attributes of our manager clients.  I wish it were really that easy though.  Sometimes it takes 3-4 calls, leaving a message, followed by several emails until we can connect with the appropriate person.  Even then, we usually only have 5-10 minutes to state our case as to why our manager clients warrant a further look.  If we are successful, we are asked to forward some marketing materials describing the product so a more thorough evaluation can be done.  If there is interest, our next step will be to schedule a conference call to introduce the portfolio manager for the strategy. 

Conference calls are usually followed by an in-person meeting at the office of the intermediary.  If there is still interest, there is likely to be a further exchange of information and additional calls.  Often, the gatekeeper will visit the manager at their office to do a more thorough due diligence review of the firm.  The manager research analyst will then write-up their recommendation of the manager and present it to the investment committee for approval.  If all goes well the manager will be approved by the investment committee and the manager will then be eligible to participate in searches. 

Now, it becomes a waiting game.  Just because a manager is search approved, is buy-rated or is added to the short-list, does not mean the manager will instantaneously be handed a bag full of money.  The manager must wait for a search to happen, where they will then be one of a handful of managers considered for a specific mandate. 

Sometimes if a manager is included in a search, the firm will need to participate in a finals presentation.  In a finals presentation, the end-investor will usually meet with 2-3 managers to determine who they feel is the best fit for their organization.  All the managers presenting generally have similar performance and products and anyone can really do a fine job.  So how is a decision made?   At this point, the decision usually comes down to trust and chemistry.

This is where relationships with investors and intermediaries can really tip the scale.  The more people we know sitting at the evaluators table the more heavily the scale will be tipped in our manager’s favor.   While past relationships are the best, taking the time to reach out to those key decision makers we don’t know also helps.  It is this proactive communication that often makes the difference in whether our manager client walks away with a new account or not. 

While this all sounds quick and easy, it’s not.  The sales cycle can be long and has only gotten longer in the past 5 years.  Often it takes 1 -2 years before a manager is awarded a mandate.  

As we discussed above, it is often hard to connect with the appropriate evaluators.  Sometimes it takes 7-8 touch points, calls and/or emails, to communicate with someone regarding our manager clients and get some type of response.  Even in cases where we have known our contact for years, it still could take some time to get a call back.  It all has to do with the priorities of the evaluator and how attractive your product is in meeting these priorities. 

It is not that research analysts are bad people, lazy or that they are intentionally avoiding your call – usually it is quite the opposite.  They are usually extremely busy people who are trying to balance their roles as best as they can.  Often this means, you will not hear back from them until their schedules slow down – which by the way rarely happens – or when your product is one they are looking at. 

Very often a return call or email is accompanied by an apology for not getting back to you sooner.  While this is not ideal, it is the norm today.  Given this sales people must learn to deal with this phenomenon and not take it personally.  It is all just a part of the game – and if you want to win you must follow the rules established by others. 

My advice, roll with it.  You can’t fight the system.  To be effective you need to be organized and persistent.  If it takes 7-8 touchpoints don’t stop after 1 or 2.  You will never be successful with that approach.  Instead, use your CRM to schedule calls and emails.  Whatever you do, don’t stop reaching out.  Often, this patience will be rewarded with a reply of some type.  Even if it is “we don’t use that product for our clients” or “we are not focusing on that product right now” at least you have an answer and can move on to the next prospect on your list knowing you did not miss out on an opportunity. 


I will not publish next week due to the holiday, but our next entry will be available January 5, 2017.  In that post we will focus on Gatekeepers and explain why they are important to our effort and how we manage our relationships with them. 

2016 was a tough year for 3PMs with search activity being at a historical low across most asset classes.  I truly hope that next year we will see a return to more normal levels of search activity and that 2017 will be a much better year for 3PMs and their manager clients. 

I want to take this opportunity to wish everyone a very happy holiday and a healthy and prosperous New Year! 

See you next year!