Imagine a boutique asset management firm with a stellar performance record but struggling to attract institutional investors. Despite their achievements, they're invisible to decision-makers. Why? They're absent from consultant databases — a critical misstep that could cost them visibility, credibility, and growth opportunities.
For asset managers, not reporting to consultant databases is akin to navigating a crowded highway with a blindfold. These platforms act as the lifeline of institutional investment ecosystems, connecting managers to consultants who influence the allocation of billions in capital. Yet, some asset managers opt out, whether due to resource constraints or strategic oversight. This decision is often a mistake and can significantly impact their marketing and growth efforts.
Consultant Databases: The Institutional Compass
Consultant databases are the go-to resource for institutional consultants advising pension funds, endowments, and other major investors. These consultants use the databases to shortlist asset managers, identify potential fits, and shape investment trends. Asset managers become invisible to this influential audience by not reporting, effectively closing doors to lucrative mandates.
Consider this: More than 85% of U.S. institutional investors worked with an investment consultant in 2023, up from 84% in 2022, while almost 95% of public pension funds used at least one investment consultant, according to a report released by Coalition Greenwich. That level of usage continues to grow according to multiple reports.
Trust and Transparency: The Credibility Test
The asset management industry thrives on trust. Consultant databases are more than directories; they're tools for due diligence, offering transparency into performance metrics, fees, and strategy differentiators. A manager's absence may signal a lack of transparency or confidence in their offering, raising red flags for consultants and investors alike.
Failing this trust test can have dire reputational consequences for a profession obsessed with risk mitigation. It's not uncommon for consultants to question: "If they're not here, what are they hiding?"
The Marketing Ripple Effect
Skipping the databases isn't just a visibility issue — it significantly hikes marketing costs. Managers left out of these platforms must compensate by investing in labor-intensive strategies like networking, direct outreach, or attending industry events. This piecemeal approach often delivers slower growth than leveraging the scalable visibility consultant platforms provide.
The Competitive Gap
While some asset managers choose the less traveled road, their competitors actively leverage these platforms as growth accelerators. Firms with robust reporting dominate these spaces, leaving non-reporting managers to compete with less visibility. This growing divide can make it nearly impossible for firms to bridge the gap.
Lessons Learned and the Way Forward
The decision not to participate in consultant databases may feel justified—perhaps a firm has unique niche strategies, strong relationships with a few key clients, or limited resources. But in reality, bypassing these platforms narrows the firm's opportunity to raise AUM.
Consultant databases are indispensable in a market defined by competition, trust, and transparency. Asset managers should view them not as an optional marketing tool but as a critical channel for connecting with institutional capital. A hybrid approach that blends consultant database reporting with targeted marketing efforts can maximize visibility, credibility, and growth opportunities.
The lesson is clear: Invisibility comes at a cost. Can your firm afford it? If you are not yet reporting and would like to understand better the value of doing so and how IMSS provides full support to get your reporting journey started, please contact us.
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