Investment Metrics

Research Study Determines Top Five Factors Critical for Asset Manager Success

DARIEN, CT and WALTHAM, MA--(Marketwire - November 8, 2010) -  A research study jointly conducted by Chatham Partners (www.chathampartners.com) and Investment Metrics (www.invmetrics.com) found that institutional investors' satisfaction with their investment managers is greatly influenced by client service and can be managed regardless of the economic climate or investment performance. 

"It is too easy to assume that investor satisfaction is dependent on portfolio performance -- it isn't always about the numbers. Investment Metrics and Chatham Partners wanted to determine how asset managers could differentiate themselves during both lucrative and unprofitable economic times," said Susan Benedetto, Director at Investment Metrics. "By comparing our vast amount of investment information with Chatham's extensive survey data, we were able to provide valuable insight for organizations evaluating their client service model."

The study found that 60% of overall satisfaction can be attributed to investment performance, but this can often be cyclical and unpredictable. In contrast, 40% of client satisfaction is attributable to service-related factors that can be delivered consistently. Additionally, managing customer service is not a singular act, but rather a broad collection of activities that combine to create high overall satisfaction levels. 

The top five factors, in order of importance, attributable to client service include:

1.  Market/investment knowledge of portfolio team 
2.  Clarity of investment reports 
3. Problem resolution skills of client service representative 
4. Frequency of contact of client service representative 
5. Timeliness of investment reports

The research mapped Chatham Partners' client satisfaction surveys and the portfolios they represented to the institutional investment performance reporting and analytics database provided by Investment Metrics' InvestWorks platform. 

Key findings include:

• Clients tended to be highly satisfied with their investment managers and client servicing teams overall during long periods of high performance (68%) and short periods of under-performance (58%).
• The majority of clients who were the most satisfied with their fee arrangements had either high performance rankings over longer periods (69%) or low performance rankings over shorter periods (61%).
• In contrast, less than 40% of clients were highly satisfied with their fee arrangements during short periods of high performance or long periods of under-performance, while nearly half of all clients were dissatisfied with their fee arrangements regardless of their performance rankings over a short period.
• Most clients (83%) were dissatisfied with their client service contact during long periods of low performance, while the majority of clients (66%) felt like they were treated as an "important client of the firm" during long periods of high performance. 

Chatham Partners' Managing Director Joshua Dietch, who co-directed the research, stressed the importance of delivering superior customer service regardless of strength of investment performance. "We found that investment managers with longer tenures tend to get more leeway in terms of performance than those with shorter tenure, because there is a perception of a relationship and trust earned," he said. "Client service is the embodiment by which one establishes this relationship and trust, so to shortchange this dynamic is to cede one's future to the cyclical nature of investment performance." 

Download the complete white paper with additional findings and an explanation of methodology at http://bit.ly/9L3PJh.