Investor Relations + Listening
Probably the most under-rated skill of a hedge fund investor relations professional is listening. No training programs or schools teach how to do it, no measures your listening performance, and in such a data, track record, pedigree driven industry it sounds a bit soft and subjective to even consider for a conference panel discussion. Doesn’t everyone know that it is important to listen? Not according to investors. Many investors have told me that they don’t get straight answers, don’t get their phone calls returned promptly, get sent the wrong information when asking for something very simple, or are just pitched for an hour instead of talking about the investors needs, goals, risk appeptite, etc.
Not listening to potential and current investors puts your entire fund management business at risk, and I believe those privat equity fund managers who constantly stay engaged, provide insight to their investor base, provide accurate and timely reporting, and communicate openly have a marked competitive advantage in the marketplace. Again, this is almost too obvious to state as an “ideal” but the fact is almost nobody does it. I once heard, success is the uncommon application of common sense, and this is an example of such a situation.
Many times investor relations professionals do not listen more because they are understaffed, approaching 300-500+ investors per year for each professional on the team, and are under intense pressure to raise capital across that wide band of potential investors. That adds up to not spending a lot of time on each individual investor. You would think that when a fund grew larger that most firms would staff up their investor relations department, and some do, but dozens of investors have complained to me at that point that unless you can allocate $30M or $50M+ you are often ignored or treated as almost an annoyance. Why would they want to come to your offices if you are just a $500M family office that maybe will allocate $5M or $10M when they can seek an allocation from a insurance plan for $70M? That attitude is what leads to a lack of attention of close detail and careful listening for many hedge fund managers.
There are many exceptions, some funds do an excellent job at growing and maintaining investor relationships and they excel because of that…but in my experience they are the exception and not the rule.
Richard C. Wilson