Toll Free:
877.456.EFSI (3374)
Before you start to market to sophisticated investors there is a question your investment firm should ask itself: Have we put in enough time and thought into what we will be communicating, and what written content we will be providing, to meet the due diligence needs of a prospective sophisticated institutional investor?
Making due diligence deliver
Money manager due diligence research matters to institutional allocators as it can positively impact the performance of their portfolios.
Some years back, an investment platform reported that it had taken data from hundreds of private investors, examined the number of hours each had spent on conducting due diligence and then looked at the resulting investment returns. They claimed to have found that each increase in time spent on diligence directly correlated with a lower percentage of losses and a higher percentage of wins. Their main finding was that the more time institutional investors spent on due diligence research, information gathering and analysis the greater the likelihood they would make more profitable investment decisions.
The sophisticated investors your firm looks to educate and persuade to understand and buy into how you invest are the very ones who will be tending to dedicate more time to vetting your firm, its data and your investment process than would the ‘friends and family’ investors who may already be investors.
Who are these sophisticated investors?
What separates the sophisticated investor from the typically less informed retail investor, and from the performance chaser who will always be looking where the grass might be greener?
These sophisticated investors are the single and multi-family offices, endowments and foundations, institutional plan sponsors, and their investment consultant gatekeepers, who follow a vetting process that they put in place to evaluate a portfolio manager. They have due diligence processes they follow for conducting their research and gathering the quantitative and qualitative data to review and compare against other investment options open to them. Most of these allocators have investment committees that discuss, debate and vote on which managers to allocate to.
To pass your due diligence vetting, prep to deliver
Are you prepared for telling and selling your investment strategy by delivering the needed information to these investors require so that they can understand and buy into how you invest?
This brings us to the Prep Rule you probably haven’t thought of: You have to put in more time preparing the detail of what you need to communicate to pass the due diligence muster of sophisticated investors than the time they will spend in vetting you.
What you say, how you say it and how you deliver it in written form to support your efforts in trying to win over sophisticated investors is what will separate you from similarly performing investment firms. Much of this differentiation comes from your beyond-the-numbers content. This goes beyond delivering your performance data and performance attribution information. It includes the important subjective element you have to sell: the investment process you developed and employ to generate your desired returns.
If you have yet to take the time to build this explanation out in detail, there is a strong likelihood that you will find your firm to be under-prepared for meeting the due diligence needs of interested but skeptical sophisticated investors who you seek to convert from prospect to client.
As this is so important, take a pause in your asset raising sales efforts. Reexamine how you have been explaining your investment product. Consider your own investment process marketing content from the imagined perspective of an investment firm trying to sell you on allocating to them. Does the answer to all the questions you would ask a portfolio manager pitching you to buy into their strategy implementation exist in print about your own firm’s investment offering? If you cannot answer Yes, then you have probably not put in the amount of time needed to build a most cogent and compelling storyline for an investment committee to discuss, debate and vote on to select you over a competitor to win their next allocation. More asset raising prep is needed.
on to select you over a competitor to win their next allocation. More asset raising prep is needed.
**********
© 2026 Frumerman & Nemeth Inc.
Bruce Frumerman is CEO of Frumerman & Nemeth Inc., a 39-year-old financial communications and sales marketing consultancy that helps financial services firms create brand identities for their organizations and develop and implement effective new marketing strategies and programs. Frumerman & Nemeth’s work has helped money management firm clients attract over $7 billion in new assets, yet they are not third-party marketers.
Frumerman & Nemeth is internationally recognized for its work in crafting for clients the beyond-the-numbers story of how they invest — content that investment committees actually discuss, debate and vote on behind closed doors when considering firms on a short list for potential investment. Importantly, this is required due diligence content that cannot be communicated in pitchbook format.
Frumerman & Nemeth’s work also includes providing strategic consulting on product and strategy-specific branding, crafting the required strategy-specific content detail and designing and producing the marketing tools needed to make it through the two-month to two-year institutional selling cycle. Clients also employ Frumerman & Nemeth to help promote the intellectual acumen of management — helping them get speaking opportunities, write and give speeches as panelists or stand-alone speakers at industry conferences, and through media relations marketing services.