If you live on the buy side, you’ve noticed that most competent people never get a chance to reach for the brass ring. Something like ninety-seven percent of all independent fund offerings fail, too. While thousands of funds survive, they’re clogged at the top. You’ve probably also noticed that you’re not less competent than your boss or your coworkers, or even the other asset managers you know.In fact, since you’re reading this, you likely also know how much hard work went into studying the markets, testing and backtesting, and estimating the market impact of your trading strategies. Unless you’re already independently wealthy, if none of that rings a bell, there’s a good chance that you’re not ready to be a rising star on the buy-side. For the self-starter, there is really no substitute for building expertise in your target market. Without that, you can fake it, but you probably won’t make it. Self-starters need something to sell: a great track-record.That’s important. You need a track record to sell. On the other hand, knowing how to sell
it may be even more important. Almost no one reaches the top of the buy-side without a deep understanding and respect for its business partners: sell-side, fund of funds… That’s tougher than it sounds. Assuming that you are that competent, disciplined self-starter, you have probably spent most of your education and career reading financial statements, analyzing credits, crunching numbers, writing dry, informative reports, and the like, not developing your personality, networking with the sell-side, or cultivating a client list. Emulate the sell-side and win. Ignore it at your peril.Emulating the sell-side begins by understanding that you’re not so very different. It’s a matter of degree. People that self-select into the buy-side want to get
the right answer, while those on the sell-side want to give
the right answer. That doesn’t sound like the Grand Canyon, but temperament can be a tough obstacle. Most folks on the buy-side believe that they have given the right answer and that the answer they gave was clearly understood. They are deservedly proud to be right about the former. They are usually wrong about the latter. It is useful to remember that most of your potential clients can’t even calculate a pretax return. That doesn’t make them stupid. They aren’t ignorant either, except in a specific way. It takes practice to explain without talking down.
It might seem easier to think in terms of an iterative series of steps, that is:
1. Build and test strategies
2. Establish competence, confidence, and expertise
3. Formulate a message
4. Cultivate brokers and clients
5. Refine the message as needed
On the other hand, time is your enemy and it can take a long time to follow the yellow brick road. If you have already spent your time becoming an expert without studying the vital sell-side, you’re stuck. If you’re just starting out, it’s more efficient to make emulating the sell-side part of your everyday process.