Why Should I Invest With You vs. Them?

Sometimes, I get asked this question. My honest response:  “I don’t know. Try us both out and see who prefer. If you don’t choose me, please let me know why. I’d love to know.”

I believe choosing an investment manager is an intimate and personal choice. Surely I can point investors to my performance page where they can view my returns and statistics vs. key benchmarks, but there’s more to the decision than just performance. 

It’s about rapport, trust, correspondence and a general comfort level. This can only be learned through experience — from actually investing with the manager. Wooing investors with marketing materials, acronyms and fancy offices is what many managers prefer, but it only helps with short-term conversion. 

I’d even argue these tactics backfire in the long-run because investors eventually realize that they invested for the wrong reasons. What they thought was important to them wasn’t. What they really wanted was someone to return their call in a reasonable amount of time, a clear explanation of the investing approach, or to pay reasonable fees.

I don’t try to convince anyone of anything. I’m sure I lose some investors due to this approach, but that’s fine. I don’t view investors as things to get or reel in. It’s not a game to me. What’s important is leaving my door open for the people that want in.

As much as investment management is a performance-driven business, it’s about taste too. Managers need to know their investors won’t bail during the next losing streak. Investors need to know how their manager approaches the markets, so they can hold him/her accountable to sticking to their system.

When you allow people to decide for themselves, the more bought-in they are when they eventually come to a conclusion. Convincing people leads to tentative commitments, performance-chasing and, ultimately, poor results.

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