We are seeing an increase in the adoption of Total Portfolio Approach (TPA), or at least thinking more about managing portfolios in a more holistic, less siloed way, among a broad range of investors. Unfortunately, my experience is that many asset managers are not responding to this as effectively as they might do.

In no small part, this is due to past experience and what managers are used to. Historically, they have only had to focus on their own product and asset class, with investors questioning each manager about their strategy and performance during the initial pitch and subsequently as part of regular reporting.

Increasingly though, this is no longer the case. The growing adoption of TPA means that investors are no longer thinking in silos. 

By assessing a portfolio in totality, they are focusing on diversification by risk factors, studying how different exposures will fit together; what strategies (and indeed asset classes) can be complementary; how to avoid excessive correlation within a portfolio; how to ensure the delivery of the necessary returns across different parts of the market cycle; and how to minimize downside across the portfolio as a whole.

Quite simply, asset managers must adapt to this shift in mentality if they are to be successful.

This is of course not to say that all the responsibility lies with the managers! It is important that clients are clear as well and making their managers aware, either directly or through their intermediaries, what their objectives and expected outcomes are at a strategic level. 

Nevertheless, the impetus primarily lies with the asset manager and it is vital that they are on the front foot in terms of asking questions and making proactive efforts to clearly understand their clients’ overarching needs, and not just their risk / return requirements from a particular strategy. There has been a lot of talk in the industry about the development of long-term partnerships – a topic of focus at a recent AIMSE Consultant Conference session that I chaired – and it is these types of efforts that can cement that type of relationship.

My honest view is that only a few asset managers are approaching client and prospect engagement with this mindset. Most continue to be focused on promoting the merits of their strategy alone. A common theme when we undertake exercises with clients to review presentation materials and delivery is that managers have a tendency to talk about their product – how it works, the investment process and performance – but with less acknowledgement as to clients’ wider requirements and where that strategy might fit in a broader portfolio.  

Managers must evolve this approach if they want to be successful moving forward and reflect this across all communications and engagement. This is, I believe, forming an increasingly important part of the types of strategic partnerships that many investors profess to want. Those managers that don’t embrace this may find they are making themselves less relevant in the eyes of investors. 

JPES works closely with asset managers to advise on key aspects of messaging and audience engagement to meet underlying investor needs. Our services include:

• Presentation reviews and training
• Messaging development
• Reviews of key marketing collateral
• Client perception audits
• Communications strategy and media engagement

For more information on our services, please contact matt.rogers@jpespartners.com