We always did feel the same, we just saw it from a different point of view.
– Bob Dylan
I am delighted to see an emerging trend with institutional allocator firms bringing product leaders into their organisation.
This serves to highlight the importance of product skills and expertise not only to managers but also investor groups, especially those with significant scale and breadth across their investment platform (including a meaningful allocation to alternatives) which give rise to complex needs from an asset class, operations, regulatory, tax and, of course, economic standpoint.
Reframe Capital has been established for the very purpose of enabling managers and investors to address and fulfil those needs.
We have years of experience in delivering and managing tailored investment solutions for a variety institutional investors, from banks to sovereign wealth funds, pension providers, insurance companies and multi-family offices, amongst others.
But what might a product specialist be required for on the investor side?
As product types and asset classes develop, new features (such as the introduction of ESG principles and measurable impact reporting) become available, investors – just like any other business – need to know where they are, set course for where they want to go and have a clear sense of how to get there.
Many businesses, including asset allocators, have a well-defined functional hierarchy, but some lack teams or individuals who are appointed to drive the business towards their goals, creating, articulating and driving strategic direction. A product strategist can support a firm in developing a vision and the roadmap for implementing it.
We all know the range of different investment vehicles and manager services is constantly evolving, and it’s vital for there to be a match between a manager offering and investor requirements. Such evolution can drive decision-making from an investor standpoint, particularly when it simplifies a closing process, facilitates or enhances investor access to a portfolio, allows for more effective performance or valuation monitoring or compliance with the investor’s on internal or external requirements.
A product expert can support an investor’s navigation of the product and distribution landscape or manager relationships, to ensure the most efficient approach in constructing a portfolio, accessing and managing an investment. They can equally drive product research, product intelligence and data gathering to guide and inform decisions of the executive leadership team.
Once an investment team has identified a manager and capability, the real work begins with due diligence, a negotiation of commercial terms, an analysis of the product vehicle through which the investment would be delivered. Large investors often have a strong position to stipulate conditions and terms for a custom product. Such terms often impose requirements to ensure a pre-defined regulatory status, tax treatment, capital efficiency. They can also prescribe a given reporting, data flow or other standard to ensure transparency and ability to oversee a manager’s investment strategy, implementation and performance.
Not all investors have a key team or individual who serve as sponsor for the organisation to achieve its desired outcome or ensure key structural conditions are met, and a product leader can fulfil that role, to coordinate a manager engagement or lead a negotiation alongside the investment team.
Evaluation of a manager investment thesis or value proposition involves many teams – investment, legal, finance, operations – all key stakeholders in the asset allocation process. But stakeholders also include vendors such as custodians, valuation agents, consultants and a host of advisers.
Product leaders naturally assume a holistic view of an investment process, whether from a manager or investor perspective. That puts them in an ideal position to understand, oversee and manage the role of each stakeholder, including external providers, to ensure accountability and alignment, the best possible outcome from that process and added value from any relationship.
Product Execution and Management
Any product specialist knows that a product closing is just the start of an investment lifecycle. Of course, successful implementation of that product launch or investment requires a product leader’s project management skills and ability, but there must then be a policy and procedural framework in place to ensure the product continues to align with the firm’s investment policy and objectives, to perform in line with expectations, to operate efficiently and within budget.
The right product manager can support an investor through the entire planning and execution phase, then build that framework (to include internal management reporting).
Thought Leadership, Education and Intelligence
Whilst having an efficiently structured product and functional operating model is foundational to success, so is client awareness, learning and development. From a relationship perspective, a product leader can support the work of client relationship teams, hosting webinars, workshops, briefings and others events to inform clients of a new manager value proposition, and the investment’s place within their portfolio.
Tier-1 institutions are not alone in recognising and responding to product needs, and we see a growing number of other investor firms who include specialists within their ranks. But not all organisations are equal and able to support internal headcount and functional growth.
If you’re an asset allocator in need of support in any of these areas, we’d be delighted to speak with you about our flexible solutions and explore how Reframe Capital might assist with your product platform.