Streamlining the RFP Process for AUM Growth

Published on 14 Mar, 2017

Quantitative Research Services

RFPs are as vital as they are time-intensive. While there’s a marked increase in the number of RFPs that an asset management company usually grapples with, the tediousness of assembly coupled with a shortage of valuable man hours has made it imperative to find more than simple workarounds to the usual process.

Large institutional investors like pension funds and trust funds are rapidly adopting standardized mechanisms in order to assign investment mandates to asset management firms, usually through a Request for Proposal (RFP), a Request for Information (RFI), or a Due Diligence Questionnaire (DDQ), quite often utilizing consultant database systems like eVestment.

Chief Investment Officers (CIOs) are now monitoring their RFP processes far more carefully than they used to, doing everything in their power to increase conversion rates for their proposals — pursuits that used to be Client Services’ or the Chief Marketing Officer’s (CMO) prerogative.

Assembling an RFP that gives you a competitive advantage requires speed, accuracy, and completeness of the questions posed by investors – things that warrant a sizable workforce. Regrettably, neither quality of resources nor the budgets to sustain them have grown in tandem with their dire need. According to a survey conducted by iiSearches on RFP process, while a manager’s RFP activity has increased over time, spending on RFP resources are not increasing. Equipping additional resources to take up the challenge doesn’t always work out the way it should either, given the usual time constraints and work pressure involved. The percentage of respondents who rate their RFP submissions as “very good quality” is also dropping, something usually chalked up to a dearth of suitable manpower or difficulties in completing the data portion of an RFP with high-integrity, high-quality data.

The RFP process could be streamlined to offset the usual woes through some pretty elementary process simplification, or perhaps even bespoke process management systems.

For instance, the questionnaire could be divided into two simple categories:

  • Generic questions
  • Investor-specific questions.

These could pertain to the company, profiles of the investment managers, vital statistics about the firm, and so on. 

According to B.J. Lownie, Managing Director and Principal Consultant at Strategic Perspectives, the must-have components in an RFP are: 

  • Accurate descriptions of the firm’s strength, market position, capabilities, and track record.
  • Clear and compelling descriptions of how the asset manager’s products and solutions are differentiated within their categories, and superior to any competitors’ offerings.
  • A client-centric approach and tailor-made proposal that exhibits the asset manager’s focus on (and alignment with) the client’s needs. 

These may seem like obvious points to address, but you’d be surprised how often they’re lacking.

He also highlights mistakes to avoid while drafting proposals, things like not directly answering the client’s specific questions, not demonstrating that the asset manager clearly understands the client’s objectives, not including clear differentiators for the firm’s investment products and services, a lack of clarity about exactly what is being offered, poor organization of information and subpar formatting, not writing for the audience, or alternatively, providing answers that are either too long and wordy or too thin and short on details.

Plenty of questions in an RFP are usually straightforward, obvious, almost boilerplate.

If regular data like the latest AUM of the company, basic performance indicators, and updated profiles of key individuals are collated beforehand, it would certainly save a lot of time while preparing a client-specific pitch. Vital statistics or pre-assembled profiles could also be stored in a handy database, easily available at your team’s fingertips. 

A number of databases like PMAPS and QVidian are already available, and they allow RFPs to be uploaded and easily searchable. Many asset management companies that regularly participate in RFPs do purchase such databases, but their usefulness is sometimes limited by an inability to acclimatize or automate your processes.  In such a scenario, your technological edge is dulled simply by the fact that you need the right people to use the best tools.

While stronger databases and an effective use of content management systems are viable solutions to streamlining your RFP processes, it’s the quality of your content that ultimately makes a difference if your proposal stands a chance to win any mandates in an RFP process. 

Only organizations that equip their people with the right tools as well as the best techniques to apply them stand any real chance in the ultra-competitive asset management market.


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